Fuel price: CMs hit back at Modi for tax cuts remark

Hitting out at Prime Minister Narendra Modi over the issue of tax cuts on petroleum products, Tamil Nadu Chief Minister M K Stalin on Thursday said people were aware of the fact behind the issue and pointed out at his government effecting a Rs 3 a litre cut on petrol earlier.

Rajasthan Chief Minister Ashok Gehlot also said the PM 'by mistake instead of saying Bhopal, mentioned Jaipur' as petrol and diesel cost more in Bharatiya Janata Party-ruled Madhya Pradesh.

The Congress leader also said Rajasthan government reduced VATs on diesel and petrol on three occasions, which resulted an annual revenue loss of about Rs 6,300 crore 'but the PM only mentioned the revenue loss of 6,000 crores of Karnataka and Rs 3500-4000 crores of Gujarat (both states ruled by BJP)'.

Making a statement in the Tamil Nadu Assembly, Stalin said since 2014, whenever international crude rates dipped, the National Democratic Alliance government did not pass on the benefit to the customers but only pocketed the additional revenue earned from the differential.

Referring to a Tamil saying, he indicated that the PM was not revealing the facts.

While the excise duty levied on petrol and diesel has to be shared with states, that has been reduced, thus affecting the states' revenue, he said.

"While the cess and surcharges are not meant to be shared with the state governments, these have been exorbitantly hiked, thus burdening people and the union government is enjoying the revenue earned from this," the CM added.

He also accused the Centre of 'pretending' to have reduced the fuel-related taxes due to 'elections in some states', in an apparent reference to the polls held earlier this year in five states, including Uttar Pradesh, Punjab and Goa.

"A week after the state elections, the prices were hiked and the Union government imposed further burden on people," he charged.

However, soon after winning the elections and forming the government last year, unmindful of the fiscal position, and according priority to people's welfare, his government had effected the tax cut for petrol even before Centre did, Stalin pointed out.

"People know all this. Who shows real keenness in reducing petrol rates and who pretends and lays the blames on others--I leave it to the people to decide," Stalin said.

He also referred to state Finance Minister Palanivel Thiagarajan issuing a detailed 'data-based' statement on the issue earlier in the day.

Palanivel Thiaga Rajan said the taxes on fuel prices levied by the Centre continue to be 'exorbitant' and it was neither 'fair' nor 'feasible' for the State to further reduce it.

In Rajasthan, Gehlot claimed the Centre has earned about Rs 26 lakh crore from excise duty in eight years which, he said, is the highest amount earned by any dispensation in the history of the country by imposing tax on petrol and diesel.

The PM talked about VAT levied by states, but did not give information about the excise of the Central government, he said.

"The PM took the name of Jaipur but wanted to give that message only to the BJP-ruled states because even today the prices of petrol and diesel in Bhopal are higher than that in Jaipur. Perhaps by mistake instead of saying 'Bhopal', he mentioned 'Jaipur'," Gehlot said in a statement.

He said the Rajasthan government had reduced VAT by two percent on petrol and diesel on January 29, 2021, while the Centre had not reduced the excise duty at that time.

"Two days later in the budget 2021-22, the Government of India imposed a new cess of Rs 4 on diesel and Rs 2.5 per liter on petrol in the name of Agriculture Infrastructure and Development due to which, the people of Rajasthan could not get the benefit of reduction in VAT by 2 percent.

"On 4 November 2021, the central government reduced the excise duty on petrol by Rs 5 and diesel by Rs 10 per liter whereas during the lockdown in May 2020, the government had increased the excise duty on petrol by Rs 10 and diesel by Rs 13 per liter, which means that the amount of excise duty increased in Covid was not even reduced completely," he said.

He said the VAT of the states is levied on the excise duty of the Centre, therefore, by reducing the excise duty, the VAT automatically gets reduced.

For this reason, due to reduction in excise duty on November 4, 2021, the Rajasthan government's VAT automatically reduced by Rs 1.80 per liter on petrol and Rs 2.60 per liter on diesel, he said.

"To give relief to the common man, the state government on November, 17, 2021 reduced VAT on petrol by 4.96 per cent and on diesel by 6.70 per cent. Due to the reduction made thrice by the state, there was a revenue loss of about Rs 6,300 crore per year, but the PM only mentioned the revenue loss of 6,000 crores of Karnataka and Rs 3500-4000 crores of Gujarat," said Gehlot.

He said that Modi probably mentioned these two states in view of the upcoming assembly elections there.

"In May 2014, when Modi became the Prime Minister, excise duty was Rs 9.20 per liter on petrol and Rs 3.46 per liter on diesel, but today excise duty is Rs 27.90 per liter on petrol and Rs 21.80 per liter on diesel. During the UPA government, the states used to get their share of excise duty, but now the share of the states has been continuously reduced to just a few paise per liter so the states are forced to increase their VAT," he said.

During the tenure of Modi government, the average prices of crude oil in the international market has been $61 per barrel, even then petrol is being sold at more than Rs 110 and diesel at more than Rs 100 per liter, he said.

During the tenure of the United Progressive Alliance government, the price of crude oil was $100 per barrel but, petrol was not allowed to be costlier, he added.

On Wednesday, Modi had pointed out that some states did not reduce VAT on petrol and diesel despite the cut in excise duty by the Centre last November.

He said the states had done 'injustice' to the people by not transferring the benefits of the cut to them.

Speaking at an interaction with chief ministers on the emergent COVID-19 situation in the country, Modi said he wanted to flag the challenges being faced by the people due to the war.

"The situation of war which has arisen, has affected the supply chain, and in such an environment, the challenges are increasing day by day," Modi said in an apparent reference to the Russia-Ukraine conflict.

"This global crisis is bringing many challenges. In such a situation, it has become imperative to further enhance the spirit of cooperative federalism and coordination between the Centre and states," he said.