Finance and Human Resource Management Minister Palanivel Thiagarajan has said that further reduction in the state tax on petrol and diesel is not fair and feasible.
In his statement, he said, “We have been urging the central government to reduce the excise duty on petrol and diesel, which has been raised several times in the last seven years, which has put a heavy burden on the people.” As the Central Government did not listen to this, in the financial statement filed on 13.08.2021, as per the instructions of the Chief Minister, we announced the reduction of the state tax on petrol by Rs. As a result, it is estimated that the state government will lose Rs 1,160 crore a year. The Government of Tamil Nadu has accepted this even in the context of the financial crisis left by the previous government.
The Reserve Bank of India’s Monetary Policy Committee has also called for a reduction in the federal tax hike on petrol and diesel in view of the need to stimulate economic growth and reduce inflation caused by rising crude oil prices. Several state governments have put forward this demand. On 3.11.2021, the Central Government reduced the central tax on petrol to Rs. 5 per liter and the central tax on diesel to Rs. 10 per liter. As Tamil Nadu imposes “Ad valorem” taxes after central taxation, the retail price of petrol will be reduced by an additional Rs. 0.65 (Rs. 5.65 in total) and the retail price of diesel by an additional Rs. As a result, the state government loses about Rs 1,050 crore a year in revenue.
The federal government has also asked state governments to further reduce state taxes on petrol and diesel. This is an unacceptable request. When purchasing a liter of petrol or a liter of diesel, there are several aspects to determining its retail price – base price (depending on crude oil and refining price), federal excise and surcharges / surcharges, transportation costs, state taxes and agency fees. The base price of petrol and diesel on 1.8.2014 and the global import price were net of today’s import price in rupee terms. The base price of petrol was Rs 48.55 per liter and the base price of diesel was Rs 47.27 per liter.
On 4.11.2021, the base price of petrol was Rs 48.36 and the base price of diesel was Rs 49.69 per liter. On 1.8.2014, the United Kingdom taxes on petrol were Rs. 9.48 per liter and Rs. 3.57 per liter on diesel. At that time,
State taxes were Rs 15.47 per liter on petrol and Rs 10.23 per liter on diesel. Before the federal government reduced taxes on petrol and diesel, the federal tax on petrol was 32.90 rupees per liter and 31.80 rupees per liter on diesel. The government has reduced it to Rs 27.90 per liter on petrol and Rs 21.80 per liter on diesel.
That is, compared to 2014 (when the base price was roughly the same) the central government is still charging an additional 18.42 rupees for petrol and 18.23 rupees for diesel. In the case of Tamil Nadu, the current state tax on petrol is Rs 21.46 per liter and diesel is Rs 17.51 per liter. This is more than in 2014 (9 rupees per liter on petrol – of which we reduced 3 rupees in August and 7.25 rupees per liter on diesel)
The AIADMK government paid.
The Chief Minister-led government has already reduced the tax on petrol to Rs 3 per liter. This tax cut is effective from 14 August 2021. The federal government has consistently increased taxes on petrol and diesel for the past seven years. If this is reduced to the level it was in 2014, state taxation will automatically decrease. This is because this tax is levied on the base price and the federal tax rate. Retail Price Details – 01 August 2014, November 2, 2021 (Before Federal Tax Deduction) and November 4, 2021 (After Tax Deduction) are as follows:
Therefore, it is neither fair nor possible for the state government to reduce the tax rate further as the federal tax rate continues to be higher. In view of this, I reiterate that the Central Government should reduce the tax on petrol and diesel to the level it was in 2014. This is the only simple, reasonable solution that will benefit everyone. Such a move would automatically reduce state taxes (most states follow the “ad valorem” tax system). Thus he has said.
.