In response to Prime Minister Narendra Modi’s criticism that states, including Tamil Nadu, did not reduce fuel taxes, State Finance Minister Palanivel Thiaga Rajan said the EU government’s taxes remain high and it is neither reasonable nor possible for it to expect the state government to reduce taxes further.
The only, simple and fair approach to improving the situation for all is for the EU government to remove the collection of cessation and surcharges and return to the rates that were in force in 2014, he said, adding that he hopes the EU the government will listen to this. reasonable request in the true spirit of cooperative federalism.
He pointed out that Tamil Nadu had reduced the VAT on petrol in August 2021 itself, ahead of the EU government’s action, which resulted in a relief of Rs 3 per liter in the state, and said it was estimated that the state would incur a loss of Rs 1,160 crore annually due to this reduction. “Yet this was done, despite the financial burden inherited from the previous government, to reduce the burden on the people,” Rajan said in a statement.
The Union Government’s taxes on petrol have risen sharply in the last seven years since the Prime Minister took office for the first time in 2014.
Although the revenue for the EU government has increased manifold, there has not been a corresponding increase in the revenue for the states. This is because the EU government has increased the tax and surcharge on petrol and diesel while reducing the basic excise tax that can be shared with the states, he said.
In 2020-21, the revenue to the EU government from taxes on petrol and diesel was Rs 3,89,622 crore, which was 63% higher than the revenue of Rs 2,39,452 crore in 2019-20.
On the other hand, in 2020-21, the Tamil Nadu government received only Rs 837.75 crore as a share of the tax delegation from the Union excise duties on petrol and diesel against Rs Rs 1,163.13 crores received in 2019-20.
On November 3, 2021, the EU government announced a tax cut of Rs 5 per tonne. liters of gasoline and 10 Rs per. liters for diesel. As Tamil Nadu levies “ad valorem” taxes imposed after EU taxes, this move by the Union caused a further loss of around € 1,050 billion. Rs in annual income for Tamil Nadu.