THIRUVANANTHAPURAM: Terming Prime Minister Narendra Modi’s comments misleading, Finance Minister KN Balagopal rejected his “request” to reduce tax on fuel. Balagopal said the state, unlike the Centre, has not increased tax in the past six years and hence there was no need for a cut.
According to Balagopal, the last change in VAT was in 2018 when the first Pinarayi Vijayan government effected a cut in the rates fixed by the previous UDF government. The VAT on petrol and diesel were slashed from 31.80% and 24.75% to 30.80% and 22.7%, respectively. The state has lost Rs 1,500 crore so far due to the cut.
According to Balagopal, the Centre’s duty on petrol rose from Rs 9 a litre in April 2017 to about Rs 31 at present. The Centre increases special duties and cess because these revenues are not shared with states. He cited the case of petrol for which the special additional excise duty is Rs 11 a litre. The states get 41% of the original excise duty charged by the Centre which is a meagre Rs 1.40 a litre.
Balagopal said the state is not in a position to effect a cut in fuel tax. After the implementation of the GST, the state is left with two major tax avenues --- fuel and liquor. The prime minister had asked states like Kerala to follow the tax cut announced by Karnataka and Gujarat. Balagopal said these states may have other resources to compensate for the loss whereas Kerala does not have any.
Rs 1,500 cr the state has lost so far since effecting cut