So Andy calling me a Bhakt is a delicious twist. He lives in HK (not Sing) - try searching for his pieces critical of Chinese economic managment of HK or of China. Haha pl send when you find one. Waiting...

Well on merits - India has very limited direct tax base. So the tax has to come from somewhere. We have chosen, and this has always been the case, to tax higher end cars and fuel - a lot. It is a choice we have made. Should taxes on E Class Mercs be 5% - maybe. Can we afford it?

Maybe not.

Can't really give gyaan on lower tax - without solving for what fills the tax hole if you reduce Merc prices to 5% GST. It has to either come from somewhere, or it has to come from a smaller government. Probably both.

But that is a longer debate about reducing taxes so much and hope for the demand pickup to increase the size of the pie. The govt. has in fact done that in direct taxes on corporates. Can it be done in every area of indirect taxes where taxes are high - def not.

Anyways - it is always easy to say reduce tax on A to improve its demand. Will it increase demand? Sure. Will it fill up the coffers in the short to medium term - likely not. It is also easy to call someone a bhakt-but don't say that if you are living in HK and not able to speak

There are also strong arguments for keeping taxes high for fuel and higher capacity vehicles. Climate change, congestion in India cities et al. But real economists don't like to talk about those.
Cities with highest traffic congestion in the world: