No more fuel tax cut in Kerala, it is Centre’s duty: Finance Minister Balagopal

Reiterates that state reduced tax in excess of proportionate drop
Kerala Finance Minister KN Balagopal (Photo | Facebook)
Kerala Finance Minister KN Balagopal (Photo | Facebook)

THIRUVANANTHAPURAM: Finance Minister K N Balagopal on Sunday ruled out a further reduction in Kerala’s fuel tax, saying it was against the interests of the state.

“Instead, the Centre should bring down the major hike that it effected in the fuel tax within a short period,” Balagopal said in a statement, justifying the state’s stand by listing its welfare measures and the gap in funds shared by Centre. He also repeated his claim that the state reduced fuel tax in excess of the proportionate reduction that followed the Centre’s tax cut.

“The Centre’s reduction of excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 reduced their rates in the state by Rs 10.41 and Rs 8.36. The exchequer will lose Rs 3.97 and Rs 3.68 on every litre of petrol and diesel, respectively. This is not just proportionate reduction. It should be seen as Kerala reducing the tax due to its peculiar tax structure. We did not make an announcement,” he said.

He also claimed that the LDF government did not increase fuel tax, unlike states like Uttar Pradesh, Goa, Haryana, Karnataka, Assam (all BJP-ruled) and Chhattisgarh (Congress-ruled). “In fact, we reduced tax on petrol from 31.08% to 30.08% and on diesel from 24.52% to 22.76% in 2018,” said Balagopal.

He alleged the Oommen Chandy-led state government increased tax on petrol 13 times even when crude prices were low. The BJP too has hiked Central tax hugely over the years, said the minister.

Focus should be on reducing Central duty, says Balagopal

The finance minister said the Central excise duty was Rs 9.48 on petrol and Rs 3.56 on diesel in 2014. “This rose to Rs 13.32 for petrol and Rs 17.97 for diesel in 2020. This happened as the government entrusted the market with price determination, increased taxes when international crude price lowered and ended the price control mechanism through oil pool account system in 2002 (while BJP was in power),” he said.

Hence, focus should be on reducing the central duty rather than asking the same from Kerala, which depends on the money for welfare activities,” said Balagopal. He said mechanisms such as the oil pool account systems were the only permanent solution to controlling fuel prices. An oil pool account is one into which all the revenues earned by public sector oil companies are deposited and expenditures like subsidies are charged.

‘We reduced tax in 2018’
Finance Minister K N Balagopal said the Kerala government did not increase fuel tax, unlike states like UP, Goa, Haryana, Karnataka, Assam and Chhattisgarh. In fact, the state reduced the tax in 2018, he said.

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