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CM for tax cuts on petro products

mumbai Updated: Jun 27, 2011 00:33 IST
HT Correspondent
HT Correspondent
Hindustan Times
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A possible reduction of Rs 1.50 to Rs 2 a litre for diesel and around Rs 16 to Rs 20 per cylinder of LPG may come your way, if state governments - responding to the Centre's call - decide to reduce sales tax and other local levies on petroleum products.

Maharashtra chief minister Prithviraj Chavan, on Sunday, hinted at the possibility of the price cuts becoming reality.

"We are examining how to reduce the fuel hike burden by slashing our tax slabs and perhaps by even cutting our annual plan size. I have spoken to the finance minister and will discuss the issue with the cabinet on Monday," said Chavan.

However, despite Chavan's assurance, the reduction in fuel taxes may not be an easy task. The Nationalist Congress Party (NCP), ruling alliance partner of the Congress, has positioned itself along with the Opposition.

At the helm of the agitation against the Centre's decision is the state's deputy chief minister Ajit Pawar, who also heads the finance department.

"It's okay for Sheila Dixit to announce a slash in fuel taxes. Here, 60% of the government is run by NCP. The finance portfolio is with Ajit Pawar, who wants to show that the Congress is anti-poor," said a senior Congress minister.

The state charges VAT between 23% to 26% on petrol and diesel. There is no tax on LPG cylinders, but there is a 5% tax on kerosene.

"A reduction in the fuel tax will affect our revenues as 20% of our VAT revenue comes from petroleum products," said a senior finance official from the state.

On Monday, a delegation of the Congress led by Maharashtra Pradesh Congress Committee (MPCC) president Manickrao Thakre will meet Chavan.

"We will urge the CM to reduce state taxes on petroleum products to facilitate reduction of the burden of the petroleum products' price hike on the aam admi," said MPCC spokesperson Sanjay Dutt.

Congress sources said that this was a bid to put the NCP on the backfoot. If Pawar as the finance minister refuses to oblige, NCP will be culpable for not easing the common man's woes.