Kerala govt firm on decision not to reduce fuel tax

Thiruvananthapuram: Despite opposition criticism, the Kerala government on Friday reaffirmed its stand that it could not forego the taxes on fuel due to the grim financial situation and said there was a natural proportionate decrease in the state tax with the Centre’s tax cut due to the peculiarity of the tax structure here.

When many other states had increased fuel tax and introduced cess during the COVID-19 period, Kerala had not done so considering the plight of struggling commoners, state Finance Minister K N Balagopal told a press conference here.

The Centre’s present decision to slash excise duty on petrol and diesel was due to the setbacks suffered by the BJP in the recent bypolls in various states, he alleged.

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.

The minister further said that the state government has also launched several financial relief packages to those hit by COVID-19 and the recent disasters as well as increased the dearness allowance by 6 per cent, all of which may be affected if the taxes on fuel price is cut.

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.

Criticising the Congress-led UDF opposition which demanded the tax cut, 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.

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 Minister’s explanation came in the wake of the opposition Congress and BJP flaying the state government for not reducing the tax on fuel on the lines of the Centre.

The Kerala Assembly on Tuesday had witnessed a war of words between the CPI(M)-led ruling front and the Congress-headed opposition over frequent fuel price hike in the country and the latter walked out of the House terming it as “State-sponsored tax terrorism.” Though the LDF government maintained that it was the Centre and not the State government which was responsible for the fuel price hike, the UDF members wanted it to forego the additional tax revenue generated on its sales for the sake of struggling commoners.