Centre should reduce its taxes on fuel: Tamil Nadu Finance Minister Palanivel Thiagarajan

The center must step up and lower its fuel taxes to provide relief to the common man, as Tamil Nadu’s post-GST taxation authority has been drastically cut and the country lacks sufficient avenues to raise its revenue, Finance Minister PTR Palanivel Thiaga Rajan said on Tuesday.

Over the past seven years, the Union government has increased taxes on petrol by Rs 23.42 per liter and Rs 28.23 per liter on diesel. The tax cut in November 2021 and May 2022 together was Rs 13 on petrol and Rs 16 on diesel, respectively. Despite this, taxes are still higher than the 2014 rates by Rs 10.42 per liter for petrol and Rs 12.23 per liter for diesel, respectively, he said and alleged that the center needed to further tax cuts.

Theaja Rajan, in response to Federal Finance Minister Nirmala Sitharaman’s speech in Parliament on August 1 regarding price hikes and increase in GST rates and excise taxes on petrol and diesel, said that the Federal Finance Minister stated that the state government did not cut taxes on petrol and diesel while the Union government cut its taxes.

“Even before the center cut its taxes on petrol and diesel for the first time in November 2021, Tamil Nadu made a cut in VAT on petrol by Rs 3 per liter in August 2021,” he said.

Moreover, tax cuts by the central government on petrol has reduced the state tax by Rs 1.95 per liter.

As a result, the government tax on petrol has been reduced by a total of Rs 4.95 per liter. Likewise, tax cuts by the Union government on diesel has reduced state taxes by Rs 1.76 per liter. Furthermore, the state government is providing diesel subsidies to fisheries and transport managers, Thiaga Rajan said in a statement here.

But the center’s duties on gasoline have risen dramatically in the past seven years, and although its revenue has increased by several thousand crore, there has been no comparable increase in revenue for states. “This is because the Union government has increased taxes and surcharges on petrol and diesel while reducing the basic excise duty that can be shared with the states,” he claimed.

Further, the position’s reduction in taxes, which was announced on November 3, 2021, will result in an additional loss of around Rs 1,050 crore in annual revenue for Tamil Nadu. The reduction in May 2022 will result in an additional loss of Rs.800 crore in annual revenue for the state.

Tamil Nadu’s share of the national population is 6.21 percent, and its share in the GDP is 9.16 percent. The minister said that the state only gets 4.079 percent as interpretation from central taxes, noting that the state did not get its due share in successive financial committees and that the share of the state is constantly decreasing.

Thiaga Rajan said that after the introduction of the Goods and Services Tax, the power of the state to collect taxes was greatly reduced. “There are insufficient ways for the state to increase its revenue. Therefore, it is the union government that has the opportunities and resources to help the common man and I ask the union government to come forward and lower its taxes.”

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