TN has no plan to reduce state's share in fuel taxes: PTR

CHENNAI: Reacting to the reduction in fuel announced by the union government, Tamil Nadu Finance Minister Palanivel Thiaga Rajan on Sunday said that the State government will face a loss of Rs 800 crore due to fuel price reduction, and there is no plan to reduce state share in taxes.

"The Union Government’s reduction in taxes that were announced on November 3, last year, has caused an additional loss of about Rs. 1,050 crores in annual revenue to Tamil Nadu. The recent reduction will cause a further loss of around Rs. 800 crore in annual revenue to the State. This will put a huge strain on the finances of the States that were already burdened due to the additional expenditure incurred by them for Covid relief activities", said the Finance Minister, in a statement.

Union Finance Minister Nirmala Sitharaman on Saturday announced that the excise duty on petrol will be reduced by Rs. 8 per litre and on diesel by Rs. 6 per litre. Palanivel Thiaga Rajan said that still the tax rates are higher when compared to 2014.

"On August 1, 2014, the Union government taxes were Rs. 9.48 per litre on petrol and Rs. 3.57 per litre on diesel. Prior to the reduction of fuel taxes in November last year the tax on petrol was Rs. 32.90 per litre and Rs. 31.80 per litre on diesel. This was reduced to Rs. 27.90 per litre for petrol and Rs. 21.80 per litre for diesel. Now, it has further been reduced to Rs. 19.90 per litre for petrol and Rs. 15.80 per litre for diesel. Though the Union Government has reduced the taxes, it is still higher than the 2014 rates by Rs. 10.42 per litre for petrol and Rs. 12.23 per litre for diesel. Therefore, there is a strong case for the Union Government to further reduce its taxes", said Palanivel Thiaga Rajan.

Further, Palanivel Thiaga Rajan citing the "precarious fiscal position" has categorically denied the demands of political parties in the state to reduce the state's share of tax. "It is pertinent to point out that the Union had never consulted the States when they increased the taxes on petrol and diesel multiple times. The exorbitant increase in taxes by the Union government has been only partially reduced through their cuts and the taxes and they continue to be high as compared to the 2014 rates. Therefore, it is neither fair nor reasonable to expect States to reduce their taxes", added Palanivel Thiaga Rajan.