Centre should reduce its taxes on fuel: TN Finance Minister


The Centre should come forward and reduce its taxes on fuel to provide relief to the common man, as post the GST Tamil Nadus power to levy taxes has been reduced greatly and the state lacked enough avenues to augment its revenues, Finance Minister PTR Palanivel Thiaga Rajan on Tuesday.

Over the last seven years, the Union government increased taxes on petrol by Rs 23.42 per litre and Rs 28.23 per litre on diesel. The reduction in taxes in November 2021 and May 2022 together was Rs 13 on petrol and Rs 16 on diesel, respectively. Despite this, taxes are still higher than the 2014 rates by Rs 10.42 per litre for petrol and Rs 12.23 per litre for diesel, respectively, he said and claimed that there is a need for the Centre to further reduce its taxes.

Responding to Union Finance Minister Nirmala Sitharamans speech in the Parliament on August 1 on price rise, increase in GST rates and taxes on petrol and diesel, Thiaga Rajan said Union Finance Minister stated that the State government did not reduce the taxes on petrol and diesel while the Union government reduced its taxes.

“Even before the Centre first reduced its taxes on petrol and diesel in November 2021, Tamil Nadu had effected a cut in VAT on Petrol by Rs 3 per litre in August 2021,” he said. Further, the reduction of taxes by the Central government on petrol has reduced the State taxes by Rs 1.95 per litre.


As a result, state taxes on petrol have reduced by a total of Rs 4.95 per litre. Similarly, the reduction of taxes by the Union government on diesel has reduced the State taxes by Rs 1.76 per litre. Further, the State government provides diesel subsidy to the Fisheries and Transport departments, Thiaga Rajan said in a statement here.

But the Centres levies on petrol have gone up substantially in the past 7 years and though its revenue increased by several lakh crores, there has not been a matching increase in the revenues to States. “This is because the Union government has increased the cess and surcharge on petrol and diesel while reducing the basic excise duty that is shareable with the States,” he claimed.

Further, the Centres reduction in taxes, announced on November 3, 2021, would cause an additional loss of about Rs 1,050 crore in annual revenue to Tamil Nadu. The reduction in May 2022 will cause a further loss of Rs 800 crore in annual revenue to the State.

“Tamil Nadus share in the national population is 6.21 per cent and the share in the GDP is 9.16 per cent. However, the State gets only 4.079 per cent as devolution from Central taxes,” the Minister said and expressed that the State did not get its due share in successive Finance commissions and the share for the State continually decreased.

After the introduction of GST, the states power to levy taxes has been reduced greatly, Thiaga Rajan said. “There are not enough avenues for the State to augment its revenues. Therefore, it is the Union Government which has opportunities and resources to help the common man and I request the Union Government to come forward and reduce its taxes,” he said.

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