More on the Sri Lanka cancer subsidy: Not just fuel

July 09, 2012 (LBO) – A few weeks back I wrote that the government is subsidizing a known carcinogen, diesel, pointing specifically to the lumbering, noxious-exhaust-spewing diesel three wheelers. I was then only talking about subsidies on diesel fuel. I’d been thinking it would be nice to support my argument with some data.

Then I saw the big advertising spreads in the Sinhala papers from the various companies selling diesel three-wheelers. The principal claim is that the fuel savings would pay for the vehicle. A nice table provided the comparison for petrol and diesel three-wheelers.

The monthly savings on fuel alone for a diesel three wheeler running 100 km a day, compared to a petrol three, would be LKR 9,255 (for those who may be reading this from abroad, that’s USD 69.41 a month). That’s serious money.

Now that the first job had been done for me, I went on to look at what had happened to the excise taxes on vehicles on 31 March 2012. I thought the government may be continuing the old practice of subsidizing diesel fuel, but hammering diesel vehicles that were not buses and trucks (the stated beneficiaries of the diesel subsidy) at the point of import.

Apparently, not any longer. Not for three-wheelers.

The taxes for petrol and diesel three wheelers have been unified, as of 31 March 2012.

What matters to a buyer deciding between petrol and diesel is not the uptick in lung cancer he may cause by purchasing a diesel three wheeler. What matters is that, as of 31 March 2012, there is no difference in taxes between diesel and petrol. Earlier, he had to pay 61 percent of the value for the diesel three-wheeler in taxes, versus 51 percent for the petrol version. Now the source of a confirmed carcinogen costs the same as the probably cancer-causing petrol-powered vehicle.

So the only differentiating factor is the fuel cost. And as we are informed by authoritative source, it’s LKR 9,255 cheaper to run 100 km in a diesel three.

For those who think we are talking about marginal amounts of cancer causing diesel fumes, the above table should be educative. One out of four vehicles brought into the country in 2011 was a three wheeler. If the excise tax unification and the diesel subsidy continue, one out of four vehicles brought into the country will be a diesel three wheeler, emitting a known carcinogen as confirmed by the WHO.

One out of four could be a low projection. People who cannot afford cars and vans but want private transport may shift to three wheelers. Already there is a shift from two wheelers to three wheelers. In which case, the cancer-emitters (including the protected-from-emission-tests buses and lorries) may easily exceed half the vehicles on the road. That’s a lot of cancer-causing exhaust on the roads.

Few years back, the government banned the importation of three-wheelers with two-stroke petrol engines to save us from asthma. It is time to ban the diesel-powered three wheelers to save us (and the government health service) from an even greater scourge: lung cancer.

No need to mess around with excise duties (no need to apologize, the WHO ruling came after the excise taxes were unified). No need to put signs saying “Diesel Kills” on diesel threes. Just ban the thing outright, quick.Has been done once. Can be done again.

Rohan Samarajiva heads LirneAsia, a regional think tank. He was also a former telecoms regulator in Sri Lanka. To read previous columns go to LBOs main navigation panel and click on the ‘Choices’ category.