Here’s why the taxes on CBUs are justified
You’ve done it. I’ve done it. All of us enthusiasts have done it, at some point or the other. All of us have looked at our favourite Lamborghini, or Porsche, or whatever piece of automotive exotica it is that gives you a mild hard on and wished it was less expensive. And in all probability, your following thought would have been cursing the Indian government for levying exorbitant taxes on these machines, keeping them out of your reach. I did so, when I didn’t know better. But now I do, and even as an enthusiast, I say they are justified. Now before you brand this piece as a whole load of socialist propaganda, hear me out.
Our main grouse is with the taxes that fall on CBUs (Completely Built Units) — they’re north of a 100 per cent effectively taking a car that costs Rs. 1 crore abroad to more than Rs. 2 crore here. Now someone who can pay Rs. 1 crore for a car is obviously among the wealthy few in our country. They ought to be paying more taxes than what the rest of the country does, and this is one way to ensure they do. Those taxes are, after all, eventually going to be pumped in to our dismal education system, sanitation systems, public works departments and roads.
You might argue that other cars, that aren’t really expensive at all get pushed out of reach of a larger number of people. Take the Polo GTI or the Mini Cooper for example. And you might find a handful of other cars that come under this bracket that are properly affordable abroad but are far too expensive once they’re imported here. The thing is, if a manufacturer saw it selling in numbers here, they’d localise it or sell it as a CKD which would considerably drive down costs. Volkswagen have massive operations here (they even manufacture left-hand drive Ventos that get shipped as far as Mexico right here in Pune) and so do BMW (who own Mini and have localised a lot of their sedans). If they really saw these cars selling to the masses, they’d invest more and give them to us cheaper. But they don’t, for a reason. They don’t see ‘business sense’ in it, which means, even if they invested in bringing the products here, not enough of us would buy them to justify the cost to them.
You might argue that paying more taxes is just feeding a system of corruption where money from government coffers don’t reach the places they are supposed to. And that is a sad reality, however, that is a battle we must fight on the side. The solution to corruption isn’t paying less taxes, it is weeding out the corruption itself.
You see, we live in a country where 268 million people live on less than $1.9 a day (I didn’t make that up, those are figures from the world bank from a survey they did in 2011). That is 268,000,000 people, who can barely get one square meal a day. Until we lift them out of their poverty, get them to an acceptable, humane standard of living, give them a proper education and a means to earn their own livelihood with dignity, I think such taxes will be justified. If it means one rich businessman has to settle for a 5 Series instead of a 7 Series, I’m okay with it. If it means I have to put my dreams of a Polo GTI on hold and get myself a Polo GT TSI instead, I’m okay with that. Stop blaming the country’s tax structure for keeping you away from things you can’t afford — look around you, look at the sorry state of things we are in and look for solutions to them. And if you do have a solution that’s better that this (and most definitely better than complaining about things), I’m all ears.