Senior Congress leader P Chidambaram on Sunday took to Twitter to say that he wondered if states could afford to give up the revenue they earn from VAT on petrol and diesel, unless the Central government devolved more funds or gave them more grants. "The situation is like being between between the 'devil and the deep sea,'" he said.
The Central government on Sunday announced Rs 8/litre reduction in excise duty on petrol and Rs 6/litre cut on diesel.
"The notification on reduction of duty on Petrol and Diesel is now available. FM used the words 'Excise Duty', but the reduction is in Additional Excise Duty which is not shared with the states. Hence, contrary to what I said yesterday, the entire burden of the reduction falls on the Centre. To that extent, I stand corrected," Chidambaram tweeted.
The notification on reduction of duty on Petrol and Diesel is now available
FM used the words ‘Excise Duty’, but the reduction is in Additional Excise Duty which is not shared with the states— P. Chidambaram (@PChidambaram_IN) May 22, 2022
The states get very little by way of share of duties on diesel and petrol , he said, adding that their revenue is from VAT on diesel and petrol.
Hence, contrary to what I said yesterday, the entire burden of the reduction falls on the Centre. To that extent, I stand corrected
The states are getting very little by way of share of duties on Petrol and Diesel. Their revenue is from VAT on Petrol and Diesel— P. Chidambaram (@PChidambaram_IN) May 22, 2022
"I wonder if they can afford to give up that revenue unless the Centre devolved more funds or gave them more grants. The situation is like being between “the devil and the deep sea"," Chidambaram tweeted.
I wonder if they can afford to give up that revenue unless the Centre devolved more funds or gave them more grants.
The situation is like being between “the devil and the deep sea”— P. Chidambaram (@PChidambaram_IN) May 22, 2022
However, the Bahujan Samaj Party (BSP) chief Mayawati on Sunday said it was the duty of not just Uttar Pradesh, but also of of other states to announce a cut in VAT on fuel immediately.
"She said that after a long time, the Central government has given some relief by reducing petrol and diesel rates to the people, who were leading a challenging life because of high inflation, poverty, stress and unemployment. Now, it is the UP as well as the other states' responsibility to follow the Centre's advice and reduce VAT on diesel and petrol," she said in a tweet written in Hindi.
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Meanwhile, Karnataka Chief Minister Basavaraj Bommai said his government would consider a further cut in fuel tax, following the Central government's decision to reduce excise duty on diesel and petrol.
"The Centre's decision has come on Saturday night, let's see, we will consider it," Bommai said.
Tamil Nadu Finance Minister Palanivel Thiaga Rajan said the Centre didn't consult the states when it increased the taxes and that his state was already incurring loss of over Rs 1,000 crore due to the earlier tax cut announced by the Centre in November 2021. Despite the tax reduction announced on Saturday, the rates were still high compared to 2014, he pointed out.
"It is pertinent to point out that the Union had never consulted the States when they increased the taxes on petrol and diesel multiple times. The exorbitant increase in taxes by the Union Government has been only partially reduced through their cuts and the taxes continue to be high as compared to the 2014 rates. Therefore, it is neither fair nor reasonable to expect States to reduce their taxes," he said in a statement.
With PTI inputs
First Published: May 22, 2022 1:27 PM IST
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