Kerala FinMin Balagopal to rally non-BJP states to oppose bringing petrol, diesel under GST
THIRUVANANTHAPURAM: Kerala has initiated efforts for a joint resistance by states ruled by non-BJP governments against the move to bring petrol and diesel under the GST regime.
Finance Minister KN Balagopal has held talks with his counterparts in some of these states. The move is on the lines of the consultations led by his predecessor T M Thomas Isaac over the GST compensation issue.
The council meeting in Lucknow on Friday is the first offline meeting after the pandemic spread and Kerala expects support from the states of West Bengal, Punjab, Tamil Nadu, Telangana and Rajasthan.
The suggestion of Balagopal is to prompt the Union government to reduce cess levied and bring down the cost of petrol and diesel.
Rationalising the cess will result in a reduction of at least `25 per litre of petrol and diesel, Balagopal has communicated to his counterparts. On Thursday, the finance minister told mediapersons that Kerala will strongly oppose the move to bring petrol and diesel under the ambit of GST.
Proposed reform will be devastating for state: Min
He said the move will result in losses worth Rs 8,000 crore to the state annually. The state is already facing a financial crisis and the proposed reform would be devastating. If the Centre sincerely wishes to give a relief, it should consider reducing the extra levies, including the additional cess, he said. The additional levies are not shared with state governments, he said.
In June, on the basis of a writ petition, the Kerala High Court had asked the GST Council to take a decision on the inclusion of petroleum products under GST. At present, petrol, diesel, crude oil, natural gas and aviation turbine fuel are not covered under GST. The state views the matter as a further loss to its tax domain.
“The Central government is presently charging nearly double the tax being collected by states on petroleum. The GST issue is being raised to divert public attention. This will further drain the state’s tax domain and the loss could be quantified only on the basis of the GST rates proposed,” said a government source.
Economist and chairman of the Fifth State Finance Commission BA Prakash feels that the change to the GST regime will do good for the people and economy though it will have an adverse impact on the state finances.
“If petrol and diesel prices are at reasonable levels, it will have a positive impact on the economy. It will help check inflation and control prices of essentials. The people, society and the economy will surely benefit from it,” he said.
However, the shift will have a negative impact on the finances of the states and Centre. “Not just big revenue, petrol and diesel sales were easy routes for quick revenue mobilisation by way of cess and other levies. The shift to GST will also put an end to this,” he said.