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:
