Reduce tax on petrol, diesel to 2014 rates, says PTR

TAMIL NADU Finance Minister Palanivel Thiaga Rajan on Friday once again turned down the Union Government's request to slash State taxes on petrol and diesel in conjunction with the recent reduction of taxes by the latter. Terming the request as unreasonable, he urged the Centre to reduce the levy of taxes on petrol and diesel to that of 2014 rates.

"While the Union's taxes continue to be exorbitant, it is neither fair nor feasible for the State to further reduce taxes. The sole, simple, and fair approach to improve the situation for all is for the Union to reduce the levy of taxes on petrol and diesel to the rates prevailing in 2014. Such a move will automatically reduce States' taxation (as almost all States follow ad-valorem)," he said in a statement.

The Minister's explanation assumes significance in the wake of demands from opposition parties particularly the AIADMK.

He said the Centre had failed to accept the requests of States in the past seven years to reverse the increase of taxes. However, TN was among the few States in the country to reduce the tax, by 3 per litre on petrol to benefit the low and middle-income users who own 2.63 crore two wheelers in the State. The estimated loss to the government was around 1,160 crore per annum.

Rajan said on November 3, the Union announced a reduction of ₹5 per litre on petrol and ₹10 per litre for diesel. Since TN levies "ad valorem" taxes after Union taxes, this move by the Union would cause an additional reduction in the pump price of petrol by ₹0.65 (₹5.65 total). and diesel by ₹1.10 (₹11.10 total) in TN and will result in a loss of ₹1,050 crore in revenue to State annually.

Media: New Indian Express