Taxes are bad. But monopoly is worse.

The government is thinking of removing tolls on highways for buses and private vehicles. Tolls cause a lot of anger as they seem unreasonable when a road has not been repaired or work is still in progress and they cause delay. Local villagers resent having to pay toll every time they go out while allowing freedom from having to pay causes heartburn for other users. The ministry is thinking of adding Re 1 cess on petrol and diesel, a 2% tax on purchase of all new vehicles and a onetime payment of Rs 1000 on existing vehicles. In 2013-14 the government collected Rs 114 billion from tolls, of which Rs 98 billion was from commercial vehicles and Rs 16 billion was from personal vehicles. Thus, the projected revenue from tolls would have been Rs 1.73 trillion between 2014 and 2019 but if the new system of taxes is adopted collection will rise to Rs 2 trillion. Wherever you have a monopoly you will have higher charges, as we have seen with Delhi airport where the operator wants more money even though the charges are the highest in the world. And there will be massive corruption as consumers are overcharged and the money is divided between the company, civil servants and politicians. Here too toll collectors have ' diverted ' Rs 9.03 billion into their own pockets, according to the Comptroller and Auditor General. The CAG has also found some ' anomaly ' in the use of money raised from tolls by R-Infra, which was denied by the company. Interestingly, some companies collecting toll are related to those supplying electricity to Delhi. These companies vigorously contested an audit of their accounts by CAG, by repeatedly appealing to the High Court, but were denied any relief. Despite the High Court order to cooperate fully with CAG the power companies constantly obstructed the audit by refusing to hand over the required documents as requested. The government can get rid of all corruption by getting rid of tolls and collecting money directly by increasing taxes, as it is proposing to do. Trouble is that increasing taxes will increase costs and that may impact sales of new cars. Sales in October were disappointing despite it being the festival month. Earlier excise duty on cars were reduced to boost sales. It is much better to increase taxes on fuels, because the higher price has been factored into the market, and bring the price of diesel equal to that of petrol, as in other countries. That will bring huge revenues, reduce the fiscal deficit, prevent adulteration of petrol and give the government a cushion to control a sudden rise in prices if international crude price spurts or the rupee falls. Encourage competition. Get rid of monopoly. Remember Adam Smith?