Karnataka budget: CM adds fire to fuel prices

BENGALURU: Oblivious to complaints from motorists against spiralling fuel prices, chief minister H D Kumaraswamy has sought to burden them further by hiking tax on petrol and diesel, in a bid to mop up revenues to fund his populist schemes.
The CM has proposed to hike the state sales tax from the present 30 % to 32% on petrol and 19 % to 21 % on diesel. With this, petrol will be dearer by Rs.1.14 per litre and diesel by Rs. 1.12.

At present, the state government gets an annual revenue of Rs. 11,000 crore, on an average, through fuel taxes, and the chief minister is hoping to mop up an additional Rs. 500 crore by the tax hike.

The proposal has dismayed the general public and industries alike as it comes at a time when the Centre is under attack for successive fuel price hike and the states were expected to lower the tax burden on petrol and diesel.

The BJP-led government at the Centre was excoriated when fuel prices skyrocketed despite falling crude oil prices before the May 12 Karnataka assembly polls, forcing a virtual freeze on daily revision of fuel prices till the polls were over. The state government too was under attack since it did not comply with the Union fuel minister Dharmendra Pradhan’s appeal to reduce the local sales tax by Rs. 2 per litre on motor fuels in October last year, while BJP-ruled states obliged.

“While we can understand the rationale behind the chief minister’s move to hike the tax on fuel, the fact of the matter is that it would result in prices going up. The commodity prices will go up especially because of the hike in the prices of diesel which is inflationary,” said B T Manohar, chairman of state taxation committee at Federation of Karnataka Chambers of Commerce and Industries (FKCCI).

Kumaraswamy, however, sought to justify his move citing the fact that motor fuel is still cheaper in Karnataka as compared to its neighbouring sates. "Even after the hike in sales tax petrol and diesel, motor fuel prices in Karnataka are still the lowest in south India. BJP tried to sarcastically take a dig at me when I read the taxation policy. But, in reality, they should be taking a dig at their own central government which in the last four years has increased petrol prices by 238%. From Rs 9.48 the Central excise duty has gone up to Rs 19.50 and for diesel from Rs 9.46 to Rs 15.33. "

Petrol was priced at Rs. 76.94 per litre on Thursday in Bengaluru and it will go up to Rs. 78.08 after the tax hike. This is still lesser as compared to the prices in Mumbai and Chennai, where the fuel cost Rs. 82.94 and Rs. 78.40 respectively.

Diesel was sold sold at Rs. 68.47 a litre in Bengaluru on Thursday and it will be priced at Rs. 69.59 after the upward revision of tax. The price of the fuel in Mumbai and Chennai was Rs. 71.94 and Rs 71.12 respectively.