Punjab refuses to toe line of BJP-ruled states on fuel price cut
State finance minister Manpreet Singh Badal has dubbed the Centre’s move as ‘too clever by half’.Updated: Oct 06, 2018 15:13 IST
Congress-ruled Punjab has refused to toe the line of BJP-ruled states on fuel price cut.
On Thursday, Union finance minister Arun Jaitley had announced that the Centre had slashed excise duty on petrol and diesel by ₹ 1.5 per litre and a ₹1 per litre cut by oil marketing companies (OMCs). Jaitley had asked states to match this cut in rates by bringing down their VAT on petrol and diesel.
State finance minister Manpreet Singh Badal has dubbed the Centre’s move as ‘too clever by half’.
As many as 12 BJP-governed states reduced their VAT by ₹2.5 a litre to bring prices down by ₹5 a litre. But Punjab, which charges the highest VAT of 35% on petrol in north India, has said the states cannot be asked to match the Centre’s cut.
“If I can calculate, both the cuts will hit the revenue of states too. After reaping a windfall and hiking excise duty several times since it came to power, the Government of India has made a meagre cut in excise duty and not special excise duty or additional excise duty in which states have no share. All states will also share the burden of excise cut and lose 63 paisa per litre,” Manpreet said.
He added oil companies too booked heavy profits due to high fuel prices. “They will show lower profits after absorbing the ₹1 per litre cut, which means the income tax paid by them will come down so will our share (42%) in it. Effectively, the Government of India will take a hit of 1.5% due to the meagre cut. It cannot ask states to take a bigger hit,” Manpreet added.
Other Opposition-ruled states such as Kerala, Karnataka, Delhi, Orissa, Tamil Nadu and West Bengal too have refused to heed Jaitley’s advice.
But Punjab may have to walk at least halfway owing to regional exigency.
It has BJP-ruled states such as Haryana, Himachal and Uttar Pradesh as its neighbours besides the Union Territory of Chandigarh, where fuel rates are the cheapest. The steep difference in taxes can lead to higher diversion of revenue to these states.
Chief minister Captain Amarinder Singh will be meeting the state’s excise, taxation and finance officials on Monday for a comparative study of fuel prices to take a call on the VAT cut. Fuel taxes are cash-strapped Punjab’s major sustenance and it is likely to budge, only to be in the price race.
Recently, five northern states, including Uttar Pradesh, Himachal, Haryana, Punjab, Delhi and Centre-ruled Chandigarh had decided to bring down regional disparity in fuel prices to plug revenue leakage.