TN FM rules out further reduction in taxes on petrol, diesel

Ruling out reduction in state taxes on petrol and diesel Tamil Nadu Finance Minister Palanivel Thiaga Rajan on Friday said the Union government has to roll back its taxes on the fuel to 2014 levels.

According to him, with the Central government's high taxes, it is neither fair or feasible for the state government to further reduce its taxes.

"I reiterate that the sole, simple, and fair approach to improve the situation for all, is for the Union Government to reduce the levy of taxes on petrol and diesel to the rates prevailing in 2014. Such a move will automatically reduce States' taxation (as almost all States follow ad-valorem taxation)," Rajan said.

The Union Government has repeatedly continuously increased the levy of tax on petrol and diesel over the last seven years.

According to him, on 01.08.2014, the basic price of petrol and diesel and the global import prices were in line with the current import prices in rupee terms.

On 01.08.2014, the basic price was Rs 48.55 per litre for petrol Rs 47.27 per litre for diesel.

On 04.11.2021, the basic price of petrol was Rs 48.36 per litre while that of diesel was Rs 49.69 per litre.

On 01.08.2014, the central taxes were Rs 9.48 per litre on petrol and Rs 3.57 per litre on diesel. At that time, the Tamil Nadu government taxes were Rs 15.47 per litre on petrol and Rs 10.23 per litre on diesel, Rajan said.

He recalled the reduction of Rs 3/litre of petrol on 13.08.2021 by Tamil Nadu government would result in a revenue loss of Rs 1,160 crore per annum.

On 03.11.2021, the Union Government announced a tax reduction of Rs 5 per litre on petrol and Rs 10 per litre for diesel.

"Since Tamil Nadu levies 'ad valorem' taxes after Union taxes, this move by the Union will cause an additional reduction in the pump price of petrol by Rs 0.65 (total of Rs 5.65), and diesel by Rs 1.10 (total of 11.10) in Tamil Nadu and will result in a loss of about Rs 1,050 crore in revenue to the State annually," Rajan said.

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