Chennai: A day after Prime Minister Narendra Modi appealed to States ruled by non-BJP parties to reduce tax on fuel, Tamil Nadu Minister for Finance and Human Resource Management Dr Palanivel Thiaga Rajan lashed out at the Centre and recalled that the State government had cut the Value Added Tax (VAT) on fuel back in August 2021 to provide relief to the people of the State.
“The Prime Minister, in the meeting with Chief Ministers on Wednesday to review the COVID-19 situation, mentioned that the Union Government had reduced excise duty to lower the burden of prices of petrol and diesel on the people last November and that while some states had reduced taxes simultaneously, some others did not provide this benefit to the people.
He further stated that many states such as Maharashtra, West Bengal, Telangana, Andhra Pradesh, Kerala, Jharkhand and Tamil Nadu did not pay any heed to the Union Government and the citizens of those states continued to be burdened,” the State Minister said in his official statement.
“Contrary to his remarks, the Government of Tamil Nadu under Chief Minister MK Stalin had in fact cut the VAT on Petrol back in August 2021, prior to the Union Government’s action. That cut resulted in a relief of Rs 3 per litre to the citizens of Tamil Nadu. It was estimated that the State Government would incur a loss of Rs. 1,160 crores 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,” he said.
The DMK Minister in state further said that the Union Government’s levies on petrol have gone up substantially in the past seven years since the Prime Minister took charge for the first time in 2014. “Though the revenue to the Union Government has increased manifold, 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 said.
“In 2020-21, the revenue to the Union Government from levies on petrol and diesel was Rs 3,89,622 crore which was 63 per cent higher than the revenue of Rs 2,39,452 crore in 2019-20. On the other hand, the Government of Tamil Nadu in 2020-21 received only Rs 837.75 crore as a share of the tax devolution from the Union Excise Duties on petrol and diesel as against the Rs 1,163.13 crore received in 2019-20,” the Minister said.
On Wednesday, Prime Minister Narendra Modi held a COVID-19 review meeting with Chief Ministers of all States and Union Territories.
In the meeting, Prime Minister Modi appealed to the States ruled by non-BJP parties to reduce tax on fuel. He said prices of fuel were higher in many opposition-ruled states and urged them to reduce Value Added Tax in “national interest” and as a part of “cooperative federalism” to benefit the common man.
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