Tamil Nadu reduces petrol price by Rs 3 per litre, state to incur loss of Rs 1,160 crore yearly
As of Friday, before the tax cut was announced, a litre of petrol in Chennai cost Rs 102.49.
The Tamil Nadu government on Friday reduced the price of petrol in the state by Rs 3 per litre with a tax cut, reported PTI. Presenting the Dravida Munnetra Kazhagam-led government’s Budget, Finance Minister Palanivel Thiaga Rajan said the decision will cost the state exchequer Rs 1,160 crore a year.
“I am happy to inform the House that this government has decided to reduce the effective rate of tax on petrol by Rs 3 per litre and thereby provide major relief to the toiling working class people in the state,” Thiaga Rajan said. Chief Minister MK Stalin “feels the pain of the working poor and the middle class”, he added.
Fuel prices vary from state to state depending on local taxes such as value-added tax and freight charges. As of Friday, before the tax cut was announced, a litre of petrol in Chennai cost Rs 102.49.
Prices of petrol and diesel have been rising since May 4 when state-owned oil firms ended the 18-day hiatus in rate revision that they had observed during Assembly elections to four states and one Union Territory. Since then, fuel prices have increased 41 times.
The Tamil Nadu finance minister blamed the Centre for the increase in fuel prices, and said it was the responsibility of the Union government to provide relief to consumers.
Central taxes on petrol went up from about Rs 9.48 per litre in April 2014 to Rs 32.9 per litre in May 2020, a nearly 250% increase, as per Ministry of Petroleum and Natural Gas data. Central taxes on diesel also went up from Rs 3.56 per litre to Rs 31.8 per litre over the same period, a nearly 800% increase.
Thiaga Rajan said the Modi government has tremendously benefitted from the increase in taxation on petroleum products at the cost of states. He pointed out that the basic union excise duty was brought down sharply even as the Union government’s cesses and surcharges were increased.
“Nowhere is this dilution of the spirit of federalism more apparent than in the taxation of petrol and diesel at the pump,” said Thiaga Rajan. “Hence, the onus of providing relief to the final consumers of petrol and diesel lies with the union government.”
Reduction in fuel prices was one of the key poll promises made by the DMK during the state Assembly elections in April. The party had promised to reduce prices of petrol and diesel by Rs 5 and Rs 4.