Centre should reduce its taxes on fuel: TN Finance Minister

The Centre should come forward and reduce its taxes on fuel to provide relief to the common man, as post the GST, Tamil Nadu's power to levy taxes has been reduced greatly and the state lacked enough avenues to augment its revenues, said Tamil Nadu's Finance Minister PTR Palanivel Thiagarajan on Tuesday.

Chennai: Over the last seven years, the Union government increased taxes on petrol by Rs. 23.42 per litre and Rs. 28.23 per litre on diesel. The reduction in taxes 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 litre for petrol and Rs. 12.23 per litre for diesel, respectively, he said and claimed that there is a need for the Centre to further reduce its taxes.

Responding to Union Finance Minister Nirmala Sitharaman's speech in the Parliament on August 1 on price rise, increase in GST rates and taxes on petrol and diesel, Thiagarajan said Union Finance Minister stated that the State government did not reduce the taxes on petrol and diesel while the Union government reduced its taxes. "Even before the Centre first reduced its taxes on petrol and diesel in November 2021, Tamil Nadu had effected a cut in VAT on Petrol by Rs. 3 per litre in August 2021", he said.

Further, the reduction of taxes by the Central government on petrol has reduced the State taxes by Rs. 1.95 per litre. As a result, state taxes on petrol have been reduced by a total of Rs. 4.95 per litre. Similarly, the reduction of taxes by the Union government on diesel has reduced the State taxes by Rs. 1.76 per litre. Further, the State government provides diesel subsidies to the Fisheries and Transport departments, Thiagarajan said in a statement here.

But the Centre's levies on petrol have gone up substantially in the past 7 years and though its revenue increased by several lakh crores, 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 claimed.

Further, the Centre's reduction in taxes, announced on November 3, 2021, would cause an additional loss of about Rs. 1,050 crores in annual revenue to Tamil Nadu. The reduction in May 2022 will cause a further loss of Rs. 800 crores in annual revenue to the State. "Tamil Nadu's share in the national population is 6.21 per cent and the share in the GDP is 9.16 per cent. However, the State gets only 4.079 per cent as devolution from Central taxes," the Minister said and expressed that the State did not get its due share in successive Finance commissions and the share for the State continually decreased.

After the introduction of GST, the state's power to levy taxes has been reduced greatly, Thiagarajan said. "There are not enough avenues for the State to augment its revenues. Therefore, it is the Union Government which has opportunities and resources to help the common man and I request the Union Government to come forward and reduce its taxes," he said.