Unfair to ask states to cut fuel prices: Tamil Nadu minister Palanivel Thiaga Rajan

CHENNAI: While it is heartening that the Union government reduced the price of petrol by Rs 9 per litre and diesel by Rs 6 per litre, it had never consulted the states when they increased the taxes on petrol and diesel multiple times, and their cuts and taxes continue to be high as compared to the 2014 rates, said state finance minister Palanivel Thiaga Rajan. Therefore, it is neither fair nor reasonable to expect states to reduce the price of fuel, he said.
In a statement on Sunday, he said the Centre has finally heeded to the repeated requests of the Tamil Nadu government to reduce the taxes on petrol and diesel, which were egregiously increased by the Centre from 2014 to 2021. Even before the Centre first reduced its taxes on petrol and diesel in November 2021, the DMK government cut the VAT on petrol in August 2021. That cut resulted in a relief of Rs 3 per litre to the people in Tamil Nadu. The state will incur a loss of Rs 1,160 crore annually due to this reduction. Yet this was done, despite the financial strain inherited from the previous government, to reduce the burden on the people, said the minister.
Even during the previous 2006-11 regime, the DMK government had cut taxes on petrol and diesel for the welfare of the common man. On the other hand, the Centre's levies on petrol have gone up substantially in the past seven years.
Though the revenue to the Centre has increased manifold, there has not been a matching increase in the revenues to states. This is because the Centre has increased the cess and surcharge on petrol and diesel while reducing the basic excise duty that is shareable with the states, said Thiaga Rajan.
In August 2014, the Centre's taxes were Rs 9.48 per litre on petrol and Rs 3.57 per litre on diesel. On the other hand, prior to the reduction of taxes on petrol and diesel by the Centre in November 2021, the levy of tax, including cesses and surcharges on petrol was Rs 32.9 per litre and Rs 31.8 per litre on diesel. This was reduced to Rs 27.9 per litre for petrol and Rs 21.8 per litre for diesel. Now, it has been further reduced to Rs 19.9 per litre for petrol and Rs 15.8 per litre for diesel.
Though the Union government has reduced the taxes, it is still higher than the 2014 rates by Rs 10.42 per litre for petrol and Rs 12.23 per litre for diesel. Therefore, there is a strong case for the Centre to further reduce its taxes, said the minister.