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‘Centre ignoring RBI pleas to reduce ‘regressive’ fuel tax’: P Chidambaram
Chidambaram said that despite the RBI’s “blunt” requests, the central government failed to pay any heed
The Modi government is ignoring repeated requests from the Reserve Bank of India (RBI) to reduce the tax on fuel, former Union finance minister P Chidambaram claimed, adding that tax on fuel was the most “regressive” form of taxation whose impact on the economy would be felt for years to come.
Addressing a press conference in Goa, Chidambaram said that despite the RBI’s “blunt” requests, the central government failed to pay any heed.
“The RBI’s October bulletin says that because of the (current) pump price, consumption of other items, including essential items, has gone down which means people are buying less milk, protein, fruits, vegetables because they are spending on petrol and diesel. Household debt has increased, savings have declined and the deficit has increased,” he said.
“These are RBI statements. This is the fourth month that the RBI has asked the central government to reduce pump prices by cutting taxes. No central bank can be blunter. But this government is completely deaf,” Chidambaram said.
“I don’t think the BJP cares if India is pulled down or not. The BJP only cares if its crony friends are making a huge killing in the stock market. I don’t know who they are helping. They are certainly not helping the people of India,” he said.
“Fuel taxes are the most regressive taxes, they affect the rich and poor alike. If the government wants money and revenue, there are other ways to raise it through progressive taxes. Instead of resorting to progressive taxation, this government is resorting to regressive taxation. We condemn this in the strongest terms,” he said.
Chidambaram’s comments come at a time amid escalating fuel prices, as the government, which had hiked central taxes on fuel back in March 2020 when international oil prices had crashed on account of worldwide lockdowns, has refused to roll back the tax hikes after international prices stabilised and began to increase.
On Monday, fuel prices were hiked once again while the price of a commercial LPG cylinder was hiked by ₹266.
“The Modi government has decided that (since) we are sucking the blood (of the people) anyway, why should we draw blood in drops? Let us draw large quantities of blood. What they’ve done and what they are doing is squeezing every Indian citizen - rich or poor. The poor of course suffer the most from these exorbitant, unconscionable and condemnable increases in prices. There is absolutely no economic justification for this rise in prices,” Chidambaram said.
“This price rise is only because of high taxation. The effective rate of tax on petrol of central government tax alone is 33%. On diesel, it is 32%. On a single commodity to levy a 33% tax and a 32% tax is completely unacceptable. It is more than the corporate tax rate. Corporations that make billions of Rupees are taxed at a lower rate. Whereas petrol and diesel are taxed at 33% and 32%,” he added.
The Congress said that the skyrocketing fuel prices will be a core election issue going into the upcoming Legislative Assembly elections in Goa.
