Bommai silent on further cut in fuel tax

Chief Minister Basavaraj Bommai on Wednesday was non-committal on any further cut in fuel tax, as he maintained that any decision in this regard will be taken after looking at the economy of the state.

He said this as Prime Minister Narendra Modi on Wednesday flagging higher fuel prices in many opposition-ruled states, urged them to reduce VAT in ”national interest” to benefit the common man and work in the spirit of cooperative federalism in this time of global crisis.

”He (PM) gave an example. In November when the central government reduced excise duty, some states too reduced, it has benefited the people of the state and it is cooperative federalism. He said it will help if other states reduce tax as well, so that neighbouring states are not affected,” Bommai told reporters in response to a question.

Asked whether there will be any more cut in fuel tax, with prices increasing, the Chief Minister said, ”Let’s see. We must see our economy also. Based on that, we will decide.” At his interaction with chief ministers of various states, on the emerging COVID-19 situation in the country via video conferencing, Modi raised the issue of many states not adhering to the Centre’s call for reducing the Value Added Tax (VAT) on petrol and diesel after his government slashed excise duties on fuel in November last year, and called it ”injustice” to people living there and also harmful for neighbouring states.

In his remarks, Modi cited the example of Karnataka and Gujarat, both ruled by the BJP, saying they have suffered revenue loss of nearly Rs 5,000 crore and Rs 3,500-4,000 crore respectively by reducing VAT, but they did so to help people. Their neighbouring states did not, he added.

States like Maharashtra, West Bengal, Telangana, Andhra Pradesh, Tamil Nadu, Kerala – all ruled by different opposition parties – have not reduced VAT for some reasons, and prices there are higher than other states, the Prime Minister said.

In November 2021, the Karnataka government had cut sales tax on petrol from 35 per cent to 25.9 per cent and on diesel from 24 per cent to 14.34 per cent, which resulted in petrol price reducing by Rs 13.30 per litre and diesel by Rs 19.47 per litre. Currently, a litre of petrol in Bengaluru costs Rs 111.09 and diesel at Rs 94.79.