Central govt should cut its tax on fuel, says TN govt

The Centre should come forward to reduce its tax on petroleum products since the resources for State's own tax revenue is meagre, Tamil Nadu Deputy Chief Minister O Panneerselvam told the Assembly on Saturday.

Panneerselvam, pointing to accusations by the main opposition DMK over the interim budget (2021-22), said a flawed view, holding the state government responsible for the petrol and diesel price rise, was being propagated.

"There is no iota of truth in such a view," he said replying to the general discussion on budget.

Referring to aspects like global economic cyclical changes vis-a-vis the coronavirus pandemic, he said the state government last year modified the system of taxation on petrol and diesel anticipating abnormal changes in prices of petroleum products.

"If the old system had been followed there may have been a scope for the state government to get more revenue during price rise. However, to guard the people from price rise, the government changed the taxation system," Panneerselvam, who holds the finance portfolio, said.

The ad valorem tax was brought to 15 per cent from 24 per cent in addition to a specific tax of Rs 13.02 per litre last year, he noted.

For diesel, ad valorem tax was fixed at 11 per cent from the previous 25 per cent plus Rs 9.62 per litre and the modified system was in vogue from May 4, 2020, he said.

To protect its tax revenue from petrol and diesel notwithstanding a fall in global crude prices the Central government increased excise duty several times, he said.

However, there was no change in tax sytem in Tamil Nadu from 2011 to 2017.

"Additional cess and surcharges are being levied by the Central government," he said, adding, state taxes alone were not the reason behind the increase in fuel prices.

In view of the Centre's additional cess and surcharges, the revenue to the state government has also been hit, he said.

While the Centre's excise duty mop-up increased 48 per cent during April-November 2020, the Tamil Nadu's government's excise revenue share slid by 39.40 per cent, he said.

"We are duty bound to urge the Central government to come forward to reduce its tax on petroleum products as the resources for State's own tax revenue is meagre," he said.

Amid an outcry over record high petrol and diesel prices, Union Finance Minister Nirmala Sitharaman had recently said the Centre and state governments would have to together work out a mechanism to bring retail rates to reasonable levels.

Poll outlook

Targeting DMK, the Deputy CM said members of the main opposition used to stage walkout after chatting in the House briefly and they had never respected their democratic duty of taking part in House proceedings.

Panneerselvam said, "DMK deputy leader Duraimurugan has said tdhat they would come to the House only after M K Stalin assumes office as the Chief Minister." "Stalin is not going to become the Chief Minister and DMK men are never going to visit the Assembly. They would face defeat in Assembly polls," he added.

Tamil Nadu would go to polls on April 6 along with Puducherry and Kerala.