‘Revenue deficit doesn’t allow VAT cut on fuel’, says Tamil Nadu Deputy Chief Minister O Panneerselvam

OPS says changing VAT according to fluctuation in fuel price cannot be done, assures a decision on the issue would be taken in consultation with Chief Minister

Published: 07th June 2018 04:03 AM  |   Last Updated: 07th June 2018 04:03 AM   |  A+A-

Chief Minister Edappadi K Palaniswami making announcements under Rule 110 in the State Assembly on Thursday | Vinod Kumar T

By Express News Service

CHENNAI: Deputy Chief Minister O Panneerselvam told the Opposition on Wednesday that the State government hit by revenue deficit was not in a financial position to reduce VAT on petrol and diesel to bring down prices. But, he said depending upon the situation, a decision on this would be taken in consultation with Chief Minister Edappadi K Palaniswami.

Raising the issue during zero hour, Leader of Opposition, M K Stalin said at present the petrol price stood at Rs 80.80 and diesel price at Rs 72.72 in Tamil Nadu putting a big burden on the common man. This would have a cascading impact on the prices of essential commodities. Kerala had reduced the price by Rs 1 from June 1. Pointing out that the past DMK regimes reduced sales tax in 2006, 2008 and in 2011 to bring down fuel price, he urged the State government to reduce the tax on petrol and diesel.

Panneerselvam said the VAT on petrol in Kerala stood at 31.8 per cent while it was 24.5 per cent for diesel.  From June 1, Kerala had reduced the VAT to 30.11 per cent for petrol and 22.77 per cent for diesel. In Tamil Nadu,  34 per cent VAT was being levied on petrol and 25 per cent VAT on diesel.
“But the difference is that Kerala levies surcharge over and above VAT whereas Tamil Nadu government does not levy surcharge on fuel. Besides, even after reducing the VAT, the price of petrol in Kerala stands at Rs 80.01 and diesel at Rs 73.76 - i.e., even before reducing VAT, the prices are less in Tamil Nadu,” he pointed out.

He said oil companies were fixing the price depending on crude oil prices in the international market and when the prices comes down, fuel price would also go down. But, changing the VAT according to fluctuation in fuel price cannot be done. After implementation of GST, the taxes on petroleum products and alcohol for human consumption alone were left with the government.

Panneerselvam also underscored the fact that Rs 1,120 crore dues towards implementation of GST for 2017-18 and the inter-State GST for this year were yet to be disbursed by the Centre. While TN has been severely affected due to the 14th Finance Commission, it has been estimated that the revenue deficit for TN government for 2017-18 which stands at Rs 17,370 crore would go up to Rs 19,374 crore during 2018-19. The State government was depending on State’s Own Tax Revenue to implement welfare schemes and other needs.


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