Reducing tax on petrol not a good idea, say officials | mumbai | Hindustan Times
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Reducing tax on petrol not a good idea, say officials

Even as the Congress-led Maharashtra government is under pressure to make petrol more affordable to the common man, the state’s sales tax department is unwilling to reduce the value-added tax (VAT) on petrol.

mumbai Updated: May 25, 2012 01:31 IST
Dharmendra Jore

Even as the Congress-led Maharashtra government is under pressure to make petrol more affordable to the common man, the state’s sales tax department is unwilling to reduce the value-added tax (VAT) on petrol.

After Wednesday’s price hike, petrol in Mumbai costs Rs 78.57 per litre. The Congress-led governments in Kerala and Uttarakhand have waived the tax to offer relief up to Rs2 per litre.

Chief minister Prithviraj Chavan told an informal gathering of reporters on Wednesday night that cutting tax on petrol would mean less funds for development. The sales tax (VAT) department contributes more that 70% of the state’s revenue. He said the hike was a major concern but he did not confirm whether he would initiate a total or partial rollback. Finance minister Ajit Pawar was unavailable for comment. The chief minister said in Satara that he would consult the Centre and his cabinet colleagues on the tax reduction issue.

Sales tax officials, who report to Pawar, said that the rate of VAT in Maharashtra was much less than other states. They said that if reduced further, it would cause massive losses to the state exchequer.

Currently, Maharashtra charges 26% in Mumbai and 25% in the rest of the state, compared to Andhra Pradesh (33%), Punjab (32.69%), Karnataka (31.25%), Madhya Pradesh (30.04%), Rajasthan (28.89%), Tamil Nadu (27%) and West Bengal (26.87%). Most of these states have non-Congress governments, which are ready to reduce taxes for political reasons.

“We cannot change VAT rates every time the petrol price fluctuates. Last year, the price was increased four times and rolled back twice,” a highly-placed bureaucrat told HT.

Meanwhile, the opposition parties are up in arms over the fuel hike. While the BJP has announced a protest on May 31, the Shiv Sena too has threatened a strike.

Shiv Sena chief Bal Thackeray on Thursday called for a nationwide protest against the petrol hike and has also hinted at a Bharat Bandh.

Thackeray took the opportunity to hit out against the Congress and the people of the country who have voted the party to power. “Even after the price rise has hit people so hard how do they still vote Congress to power... it’s time the Congress is buried,” he said.

He appealed to all opposition parties to unite and create strong public opinion against the ruling Congress government.

Sena MP Sanjay Raut told reporters that his party would participate in the bandh called by the NDA.