States hit back over govt’s appeal to reduce fuel VAT
NEW DELHI/MUMBAI/KOLKATA: Parties in power in states singled out by Prime Minister Narendra Modi for not reducing levies on fuel hit back on Wednesday, accusing the Centre of being disingenuous and alleging that the Union government was instead the one fleecing citizens by levying a variety of taxes and cesses.
The response came after Modi urged states to cut Value Added Tax (VAT) on fuel in “national interest”, a remark he made during a videoconference with chief ministers meant to discuss Covid-19 and the recovery from the pandemic.
The PM named Maharashtra, West Bengal, Telangana, Andhra Pradesh, Tamil Nadu, Kerala for not having reduced VAT since November, when the central government had cut the excise on petrol and diesel. All of these states are ruled by rivals of the Prime Minister’s Bharatiya Janata Party (BJP).
“The Prime Minister gave a one-sided speech. It was misleading and incorrect. We (chief ministers) didn’t have the scope to counter. We could only watch and hear him. We don’t agree with him and we demand [the Cetntre] reduce the prices of fuel,” Bengal chief minister Mamata Banerjee said.
“The slashing of excise duty on fuel was just eyewash. The Centre imposed multiple cesses — from agriculture cess to education cess. The states don’t get any share. And now, you are blaming the states to portray yourself as saints,” she added.
Telangana state finance minister, T Harish Rao, alleged that it was the Centre that was “fleecing” fuel consumers in the name of special excise duty, additional excise duty and road cess.
“Except in 2015, when the VAT was rounded off to the nearest rupee, the Telangana government has not increased any tax on fuel. On the other hand, the Modi government has earned ₹24 lakh crore in the form of cess from consumers in the last seven years. Telangana is supposed to get ₹54,000 crore as its share, but the Centre has denied the same,” Rao said.
After the virtual meeting, Maharashtra chief minister Uddhav Thackeray’s office issued a statement detailing the Centre and the state government’s share of taxes on fuel. “It is not correct that prices of petrol and diesel are going up because of the state government’s VAT,” Thackeray stated.
Jharkhand and Punjab called for bringing fuel under the Goods and Services Tax (GST) regime.
Kerala finance minister TN Balagopal said: “The PM’S statement creates enough misunderstanding and gives an impression that states are behind recurring price hike of petroleum products. States are not getting their due and even the cess and surcharge are pocketed by the Centre.”
Odisha finance secretary Vishal Dev said the state government would soon take a decision on reducing VAT on fuel.
Tamil Nadu finance minister Palanivel Thiaga Rajan said that contrary to the PM’S remarks, the state government had cut the VAT on petrol in September 2021, prior to the Union Government’s action.
Officials of the Centre dismissed the claims by the states and insisted they should cut taxes to help citizens.