Upto Rs 4.3 lakh more for Fortuner, Gloster SUVs: How much extra you would pay if ‘pollution tax’ becomes real
How much extra you would pay if ‘pollution tax’ becomes real for SUVs like Fortuner and Gloster
With rising air pollution in major Indian cities, there have been discussions around imposing a 'pollution tax' on vehicles which have higher emissions such as SUVs and luxury cars. This additional tax aims to discourage the use of such vehicles and reduce overall emissions. But how much extra would owners of popular SUVs like the Toyota Fortuner and MG Gloster need to pay if such a tax is implemented? Let's take a look at the potential impact on prices of some top SUV models in India.
Toyota Fortuner
The Toyota Fortuner is one of the best selling SUVs in India priced between Rs 31.79 - Rs 48.43 lakh (ex-showroom). Here is a look at the different Fortuner variants and their current ex-showroom prices:
- Fortuner Petrol MT: Rs 31.79 lakh
- Fortuner Petrol AT: Rs 33.53 lakh
- Fortuner Diesel MT: Rs 34.45 lakh
- Fortuner Diesel AT: Rs 36.19 lakh
- Fortuner Legender 4X2: Rs 38.91 lakh
- Fortuner Legender 4X4: Rs 41.47 lakh
If a 15% pollution tax was applied on the Fortuner, the prices would increase by around Rs 4.3 lakh to Rs 6.25 lakh depending on the variant. The Legender 4X4 top model would see its price go up from Rs 41.47 lakh to Rs 47.7 lakh (ex-showroom).
MG Gloster
The MG Gloster premium SUV is currently priced between Rs 31.99 - Rs 37.28 lakh (ex-showroom). The variant-wise ex-showroom prices are:
- Gloster Super - Rs 31.99 lakh
- Gloster Sharp - Rs 35.58 lakh
- Gloster Savvy: Rs 35.78 lakh
- Gloster Savvy 6-seater: Rs 37.28 lakh
With a 15% pollution tax, the MG Gloster range would see the prices increase by around Rs 4.3 - Rs 5 lakh. The top-end Savvy 6-seater would breach the Rs 40 lakh mark with its ex-showroom price going up to Rs 42.8 lakh.
Mahindra Scorpio-N
The latest generation Mahindra Scorpio-N SUV was launched in 2022 at a starting price of Rs 11.99 lakh (ex-showroom). The different Scorpio-N variants and their ex-showroom prices are:
- Scorpio-N Z2: Rs 11.99 lakh
- Scorpio-N Z4: Rs 13.49 lakh
- Scorpio-N Z6: Rs 14.99 lakh
- Scorpio-N Z8: Rs 16.99 lakh
- Scorpio-N Z8L: Rs 18.99 lakh
Due to its relatively lower pricing, the percentage increase in prices for Scorpio-N variants would be between Rs 1.8 lakh to Rs 2.85 lakh if a 15% pollution tax is applied. The top Z8L model would see its price rise from Rs 18.99 lakh to Rs 21.84 lakh (ex-showroom).
Volvo XC90
The luxury SUV Volvo XC90 is priced at Rs 96.56 lakh onwards (ex-showroom). The different variants have the following ex-showroom prices:
- Volvo XC90 B6: Rs 96.56 lakh
- Volvo XC90 B6 Ultimate: Rs 1.04 crore
- Volvo XC90 Recharge: Rs 1.16 crore
Being a luxury imported model, the Volvo XC90 already attracts high taxation in India. A 15% pollution tax would further increase its prices by around Rs 14.5 lakh to Rs 17.25 lakh depending on the variant. Clearly, premium SUV buyers will be most impacted by this proposed tax.
The above analysis shows that depending on the baseline cost of the SUV, the pollution tax could increase prices by around Rs 1.8 lakh to as high as Rs 6.25 lakh if it is levied at 15%. This would make many popular SUVs significantly more expensive for buyers.
Why SUVs and luxury vehicles are being targeted for pollution tax
SUVs and luxury cars typically generate higher emissions compared to smaller vehicles because of their size and powerful engines. A typical mid-size SUV may generate 40-80% more emissions than a small petrol hatchback. With rising air pollution, SUVs are viewed as 'non-essential' luxury items that can be taxed higher to reduce their ownership and usage. Some key reasons they are being targeted:
- Higher emissions: SUVs have 20-25% higher emissions compared to medium-sized sedans and 40-60% more than small hatchbacks on an average. Their large engines displace more cubic capacity and consume more fuel.
- Perceived as luxury purchases: SUVs are still considered lifestyle vehicles catering to the affluent sections. Taxing them more is unlikely to affect genuine commercial vehicle owners.
- Revenue generation: The additional pollution tax on expensive SUVs can generate significant revenues which can be used to fund electric vehicles, public transport and other green initiatives.
However, the counter-argument is that SUVs provide greater comfort, seating capacity and practicality for larger families and businesses. Many owners also need an SUV's all-terrain capabilities. Penalizing their ownership through higher taxes may not achieve desired objectives.
Examples of pollution taxes on cars in other countries
Many countries and cities around the world have adopted pollution and congestion taxes and charges to curb vehicle emissions and ownership. Here are two significant examples:
Singapore's tiered vehicle taxation system
Singapore first imposed quota restrictions on vehicle ownership. It charges 65-80% taxes on car purchase prices and has additional recurring taxes pegged to emissions. The tax can go up to 175% for the largest luxury vehicles. This policy has helped curb excessive car ownership.
London's congestion charge
Since 2003, vehicles entering central London on weekdays have to pay a 'Congestion Charge' now at £15 per day. Higher emissions vehicles have to pay more. The holistic policy has reduced traffic in the city by 15%.
Other ways to reduce vehicular emissions
While the pollution tax looks at discouraging specific vehicle purchases, there are some other effective ways of reducing overall vehicular emissions in India:
- Tightening of fuel efficiency and emission norms: India is scheduled to move to BS-VI norms in 2020 which will lower emissions significantly.
- Push towards electric mobility: Lower GST and road taxes on EVs can make them attractive alternatives to conventional vehicles.
- Improving public transport: Higher budgets and greater coverage of metro rail, buses, shared mobility will lower dependence on private vehicles.
- Notifying truck entry restrictions: Restricting the entry of heavy trucks and commercial vehicles into cities can help lower emissions and congestion.
So in summary, curbing vehicular pollution will require a multi-pronged approach with the right incentives and disincentives at both the vehicle purchase and usage stages. The pollution tax is a contentious topic which requires careful assessment for wider impact while formulating future policies.
Conclusion
The proposal for an additional 'pollution tax' on SUVs and luxury cars aims to account for their higher tailpipe emissions compared to small cars. However, a balanced approach is needed to not penalize buyers who genuinely need these vehicles. An effective green mobility policy would rely on a mix of measures like tighter fuel efficiency norms, push towards EVs, expanding public transport, and creating low emissions zones in congested areas. The pollution tax can only be one of the measures to curb emissions rather than a standalone solution. Careful impact assessment is needed before applying any punitive taxes on popular vehicle categories.
Frequently Asked Questions
1. How much extra would I pay for my Toyota Fortuner if a 15% pollution tax is levied?
If a 15% pollution tax was applied, the ex-showroom price of your Toyota Fortuner would increase by around Rs 4.3 lakh to Rs 6.25 lakh depending on the variant you own. The top-end Legender 4X4 would see its price go up by around Rs 6.25 lakh.
2. Will a pollution tax also be applied on compact SUVs like Hyundai Creta?
As of now, there is no clarity if smaller SUVs like Hyundai Creta will also attract the pollution tax. The current proposal primarily covers larger SUVs and luxury vehicles. Smaller SUVs may be exempted.
3. How much extra will I need to pay for importing my luxury SUV like the Audi Q7?
Luxury imported SUVs already attract very high customs duty in India ranging from 60% to 100% or more. The proposed pollution tax of 15% would be applied on top of existing duties. For an Audi Q7 priced around Rs 80 lakh, you may need to pay approx. Rs 14 lakh extra.
4. What are the other options available to reduce vehicular pollution?
Some other effective ways to curb vehicular pollution are tighter fuel efficiency norms, higher push for EVs, improving public transport, restricting entry of commercial vehicles into cities, and demarcating low emissions zones.
5. Will a pollution tax hurt SUV owners who actually need it for difficult terrains?
It is a valid concern that genuine SUV users like off-roaders may feel penalized. The impact on their ownership cost needs to be assessed before applying any new tax. Alternately, exemptions can be provided to registered commercial, government and fleet vehicle operators.
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