HYDERABAD: AS fuel prices continued to spike for the 11th straight day, government mulled a ‘windfall tax’ on oil producers saying it was a ‘permanent solution’ to fixing the problem while opposition leaders threw a #FuelChallenge at Prime Minister Narendra Modi and threatened to launch nationwide protests. A pitch was also made for bringing petrol and diesel under the purview of GST, saying it would ensure reduction of rates.
To moderate retail prices of petrol and diesel, the government may levy a windfall tax on producers like the ONGC. The tax, which may come in form of a cess, will kick in the moment oil prices cross USD 70 per barrel, reported news agency PTI. Oil producers, who get paid international rates for their produce from domestic fields, would have to part with any revenue they earn from prices crossing USD 70 per barrel mark. Revenues thus collected would be used to pay fuel retailers so that they absorb spikes, the report added.
The move may be accompanied by a minor tinkering with excise duty rates to give immediate relief to consumers. Sources said the government is likely to levy the cess on all oil producers -- public and private -- to avoid criticism of stifling state-owned explorers. A similar tax was considered in 2008 when oil prices were on the rise but the idea was dropped after stiff opposition from private firms like Cairn India. Meanwhile, States too would be asked to cut sales tax or VAT to show impact on retail prices.
Parroting the narrative, NITI Aayog vice chairman Rajiv Kumar claimed on Thursday that State governments have the capacity to reduce duty on petrol. He also added that the Centre must create fiscal space to deal with the impact of spurt in prices. “There is merit in reducing the duties, but both by States and the Centre. More so for the states as they tax the oil on ad valorem basis ... So states can take that cut much more than the Union government,” Kumar said.
Meanwhile, mocking Modi’s response to cricketer Virat Kohli’s fitness challenge, Congress president Rahul Gandhi dared him to accept a challenge to reduce fuel prices. “Dear PM, Glad to see you accept the @imVkohli fitness challenge. Here’s one from me: Reduce fuel prices or the Congress will do a nationwide agitation and force you to do so. I look forward to your response,” Gandhi tweeted even as opposition parties upped their criticism of Centre for failing to control the prices.
Rahul Gandhi @RahulGandhi
Dear PM, Glad to see you accept the @imVkohli fitness challenge. Here’s one from me: Reduce Fuel prices or the Congress will do a nationwide agitation and force you to do so. I look forward to your response. #FuelChallenge