Reduce fuel prices, Tamil Nadu BJP chief Annamalai tells DMK government

Contending that for the first time Tamil Nadu government’s Value Added Tax is higher than the Union government’s Excise Duty, BJP state unit chief K Annamalai asked the DMK to immediately fulfil its poll promise of reduced fuel prices.

In a statement released on Tuesday, Annamalai asked the Tamil Nadu government to reverse the March 2020 government order passed by the AIADMK dispensation and calculate the state VAT as a percentage of cost price.

“For the first time, the Tamil Nadu government’s Value Added Tax (VAT) is higher than the excise duty imposed by the central government. If the tax imposed by the state government on petroleum products is higher than the Excise Duty imposed by the central government, how can there be revenue loss for the state?” he asked.

The VAT is higher now after the Centre reduced the fuel prices last week.

Read | Is this federalism? PTR on Centre asking states to reduce taxes on fuel

Annamalai accused the DMK of not honouring its election manifesto promise of reducing the price of petrol by Rs 5 and diesel by Rs 4. He claimed that the government “merely reduced Rs 3 on petrol, while there has been no cut in diesel.” According to Annamalai, other state governments have reduced their state taxes on fuel following the reduction in the Union government's excise duty.

“But Arivalayam DMK government has continued their unjustified activities and held its prestige over the state and its subjects’ interests. The figures clarify how the VAT imposed by the state government is higher than the central government’s Excise Duty,” he said.

Annamalai’s statement comes days after Tamil Nadu Finance Minister P T R Palanivel Thiaga Rajan ruled out any reduction in state taxes.

Since Tamil Nadu levies ‘ad valorem’ taxes (its essential characteristic is that the tax is proportional to the value of the taxed asset, unlike a specific tax), applied after Union taxes, Thiaga Rajan said the state will lose Rs 800 crore in annual revenue due to the Centre’s decision to reduce taxes.

Similarly, the Centre’s move to reduce taxes in November 2021, had caused an annual loss of about Rs 1,050 crore, Rajan said.

“This will put a huge strain on the finances of the states that were already burdened due to the additional expenditure incurred by them for Covid relief activities,” Rajan had said. He claimed that Tamil Nadu reduced taxes last year despite inheriting a precarious fiscal position from the previous government and incurring additional expenditure to handle the Covid-19 pandemic.