‘Revenue from petrol hike to fuel agriculture’

Govt looks to mop an additional revenue of Rs1,000 crore after increasing petrol price by Rs3 a litre to Rs77.45

The Maharshtra government is likely to earn an additional revenue of Rs1,000 crore in 2017-18 owing to an increase in petrol surcharge by Rs3 a litre.

The extra revenue will be used for agricultural development, said the government.

The government hiked the surcharge to Rs9 with the existing value-added tax at 26% in Mumbai, Thane and Navi Mumbai from Friday midnight — raising the cost of petrol to Rs77.45 per litre. For the rest of the state, the tax rate is 25% plus a Rs9 per litre surcharge.

To avoid losing revenue to the neighbouring states, the government has not changed VAT rate and surcharge on diesel, which are 24% and Rs2 a litre in Mumbai and 21% and Rs2 a litre in the rest of Maharashtra.

This is the second time the Devendra Fadnvais-led governement has hiked the petrol prices. In October 2015, the government levied a surcharge of Rs 2 on petrol and diesel to defray revenue losses.

Finance minister Sudhir Mungantiwar, however, said the Rs3 hike will cover the losses owing to a fall in crude oil prices. “Every rupee generated from the hike will be used for the welfare of farmers. The retail

prices of petrol at the national level are going to decrease in the future and I hope this will offset the financial burden on consumers,” he told HT.

Petrol Dealers’ Association and the opposition have condemned the decision.

“Taxes on fuel have become a milch cow for the government. Whenever they face a shortfall in revenue, they increase taxes on petrol and diesel,” said Ravi Shinde, president of association’s Mumbai unit .

He was not taken in by the government’s claim that falling crude oil prices prompted the hike.

“Why did the government not reduce VAT and surcharge when the prices shot up to $140 a barrel? We have been telling the government to have a fixed VAT rather than splitting taxes between VAT and surcharge,” he said.

Sagar Rukari, spokesperson of the Federational of All Maharashtra Petrol Dealers Association, said the car owner pays 50% of the petrol price in taxes. “Maharashtra retailers sell about 320 crore litres of petrol annually and with the rise of Rs3, the government will mop up Rs1,050 more in a year. Besides VAT of 25% and a surcharge of Rs9, consumers pay central excise of 15% and octroi of Rs2.50 a litre in Mumbai,” he added.

The opposition has criticised the government for its financial mismanagement.

“The government has deceived the middle class. They had to increase the surcharge to cover up their financial failures. The government should also come clear on how it spendt ‘drought cess’ it levied one-anda-half years ago,” said Sachin Sawant, Congress spokesperson.

The state’s revenues have been hit hard in the wake of demonetisation and Supreme Court’s ban on shops selling liquor near highways.