Kerala Finance Minister KN Balagopal on Friday defended the state government’s decision to not cut Value Added Tax (VAT) on petrol and diesel despite other states following the Centre’s lead in cutting excise duty on fuel. Addressing a press conference, Balagopal said the Diwali-eve excise duty cut by the Centre was disproportionate to the increase in fuel prices over the last few months.
Justifying the state’s decision not to cut the additional tax on fuel, the Finance Minister said Kerala has not increased the state-tax on petrol and diesel for the last six years and it had actually reduced it once.
Explaining that the tax structures for petrol and diesel imposed by the Centre and the state were different, he said when the union government reduces its tax or the basic price of fuel, it would naturally reflect in the state tax as a proportionate decrease would happen there also.
“So, there is no need for the state to reduce the tax again…When the Centre reduces its tax by Rs 10 and Rs 5 for diesel and petrol, respectively, it has actually been reduced by Rs 12.30 and Rs 6.56 in Kerala,” he said.
Of this, the additional Rs 2.30 and Rs 1.56 reduced per one litre petrol and diesel were on the state’s account and so it was factually wrong to say that the southern state has not reduced the tax, he claimed. “Though there was no special announcement, the tax on fuel has actually been reduced in Kerala. The value-based tax structure in the state was formulated on that line,” the minister added.
The Centre had increased the tax by over Rs 31 in the last seven years and has reduced only Rs 10 and Rs 5 from this now, he pointed out. The BJP-led government at the Centre has now taken a misleading stance in the name of fuel price, he claimed, adding that states were not receiving a share of the revenue collected via the additional tax which was being levied irrespective of the international price fluctuations of petroleum.
He further pointed out that the central tax was too high and the union government had no right to collect such a whopping amount as tax. The Centre, he said, was infringing on states’ rights.
Taking on the opposition Congress for demanding VAT cut, Balagopal said the party’s Kerala unit, too, operates with a national perspective. Balagopal said the previous Oommen Chandy government had increased the tax 13 times. But, after the Pinarayi Vijayan government came to power in the state in 2016, the state has not increased the fuel tax so far, he added.
“Here, the Congress party is aligning with the BJP to fight against the Left. They are not looking into the interest of the state and the state’s financial condition. This move by the Opposition (VAT cut demand) is politically motivated,” he said.
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