Chennai: State Minister for Finance, Palanivel Thiaga Rajan, ruled out the possibility of the State government further reducing taxes as it was for the Union Government, whose taxes continued to be exorbitant, to reduce the levy of taxes on petrol and diesel that prevailed in 2014.
In a statement on Friday, Thiaga Rajan gave a break of the price structure for petrol and diesel in 2014 and 2021 to prove his point that though the basic price of petrol that was at Rs 48.55 in 2014 had come down to 48.36 now, the price that consumers pay had gone up from Rs 75.74 to Rs 101.40.
The finance minister clearly demonstrated that it was excise duty charged by the Union Government that led to the exorbitant rates. From Rs 9.48 in 2014 it had gone to Rs 27.90 for petrol and from Rs 3.57 to Rs 21.80, he said.
‘Over the last 7 years, the Union Government has repeatedly raised taxes on petrol and diesel, thereby placing a heavy burden on the people. We have continuously urged the Union to reverse their increases in such taxes. Though the Union Government remained unmoved, we were the first state in the country to announce a reduction of tax of Rs 3 per litre for petrol,’ he said.
He said it was done to benefit the low- and middle-income users, who own 2.63 crore two-wheelers in the State, though the government would incur a loss of Rs 1,160 crore annually.
‘The Monetary Policy Committee of the RBI had also urged the Union Government to reduce taxes on petrol and diesel as a stimulus for economic growth, and to reduce inflationary pressures as crude oil prices rose,’ he said.
The demand was also put forth by several State Governments, leading to the Union Government announcing a tax reduction of Rs 5 per litre on petrol and Rs 10 per litre for diesel, he said.
‘Since Tamil Nadu levies “ad valorem” taxes after Union taxes, this move by the Union will cause an additional reduction in the pump price of Petrol by Rs 0.65 (total of Rs 5.65), and Diesel by Rs 1.10 (total of 11.10) in Tamil Nadu and will result in a loss of about Rs. 1,050 crore in revenue to the State annually,’ he added.
The Union Government’s request to State Governments to reduce the state taxes, in conjunction with their own reduction of taxes, was not a reasonable request, the Minister said.
‘The Union Government has repeatedly continuously increased the levy of tax on petrol and diesel over the last 7 years. If it were to reduce the taxes to 2014 rates, the state tax – levied as an ad-valorem tax on the sum of basic price and Union government levy – will automatically reduce as well,’ he said.