PM Modi’s tax remarks fuel Pinarayi’s ire

Tells Centre to take steps to check price rise, not to trivialise people’s misery by blaming states

Published: 29th April 2022 07:17 AM  |   Last Updated: 29th April 2022 07:17 AM   |  A+A-

Kerala CM Pinarayi Vijayan

Kerala CM Pinarayi Vijayan (Photo | PTI)

By Express News Service

THIRUVANANTHAPURAM: Chief Minister Pinarayi Vijayan on Thursday took strong exception to Prime Minister Narendra Modi singling out a few states, including Kerala, that have not taken steps to reduce sales tax on petroleum products. Modi reportedly made the remark during a meeting of CMs on Wednesday to review the Covid situation in the country. 

In a statement, Pinarayi said the PM’s statement was unbecoming of an administrator who is aware of the current economic condition of states that bear the huge burden of social welfare expenses.  “Attempts to pin the blame of price rise on states, and not on the Centre which deals with financial management, does not befit the federal system,” Pinarayi said. 

Asking the Centre to take urgent steps to arrest fuel price hike, he said the misery of the common man cannot be trivialised by unnecessarily blaming states. Pinarayi clarified that Kerala never increased sales tax on petroleum products in the past six years. 

While the Centre increased tax on petroleum products 14 times since 2014, Kerala reduced tax four times. “It should be remembered that the hike effected by the Centre is not on basic excise duty which is shared with the state,” he said. 

Pinarayi said various surcharges and cess now constitute 15% of the total tax revenue of the Centre. As per Article 270 of the Constitution, surcharge and cess are not to be shared with states. Taxes are being increased by the Centre in a way that they do not fall under the tax share recommended by the Finance Commission, he said. 

The CM said states that are reeling under Covid crisis are being pushed into economic distress due to delay in disbursal of state share, including GST compensation. 

THE FUEL CESS-POOL

A big part of the fuel taxes the Centre collects needs to be shared with states, right? But the mop-up workaround is through cess, which is not shared and forms the bulk of the central taxes. Here’s how:

  1. Centre collects Rs 26.50 as cess out of the total Rs 27.90 tax on petrol per litre. It means only Rs 1.4 is shared with states. As for diesel, only Rs 1.80 is shared out of the total tax of Rs 21.80
  2. According to the 15th Finance Commission report, Centre has to share 41% of the divisible pool of taxes. However, divisible pool does not include cess
  3. Over five years till FY21, the Centre’s fuel tax went up by 54%, while that of states grew just 15%. Of the total Rs 6.37 lakh crore tax collected in FY21, Centre pocketed 66%



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp