CHENNAI: Chief minister M K Stalin on Thursday came down heavily on Prime Minister Narendra Modi’s statement that states like Tamil Nadu were not passing on the benefits of fuel duty cut of the Centre, leading to higher cost of petrol and diesel. “What he says is like hiding a whole pumpkin in a handful of rice,” the chief minister told the assembly, quoting a Tamil proverb. In tweet later, Stalin said the Centre had made Rs26lakh crore from fuel in the last eight years.
Finance minister P Thiaga Rajan said it was unfair to ask the state to reduce its VAT when it had not given effect to ‘200% increase in tax on petrol and six-fold increase on diesel’ like the NDA government since 2014.
During a review meeting with the chief ministers on Covid-19 on Wednesday, the Prime Minister alleged that not slashing the tax was injustice to the people. The chief minister said the Union government availed the surplus revenues despite the sharp fall in crude oil prices. It cut the basic excise duty that was shareable with the states, but increased manifold the cess and surcharge on fuel which are not shareable with the states. “The Union government pretended to slash the fuel price just ahead of elections to some states and increased it after elections, imposing additional burden on the people,” Stalin charged. The DMK government, however, reduced VAT on petrol even before the Centre reduced excise duty, in the interest of the people as stated in the election manifesto.
“I leave it to the people to decide who is really proactive in lowering petrol prices, and who pretends to lower the price of petrol and put the blame on others,” he said, asking the finance minister to continue the debate with the data. The DMK government had cut VAT by Rs3 per litre on petrol in August last, and thrice in 2006-11.
Thiaga Rajan said the levy of tax, including cesses and surcharges by the Centre on petrol had seen an increase of 200% ever since the Modi government took over in 2014. Similarly, there had been a six-fold increase of taxes for diesel. The excise duty levied by the Centre, inclusive of cesses, stands at ₹27.90 per litre of petrol and ₹21.8 per litre for diesel after the cut in November last. “If we had given effect to an increase of six-fold (to the state’s VAT) like them (in excise duty), then we could reduce it when they reduce. It is unfair to tell us to slash it,” the finance minister said. The state currently levies ₹22.54 per litre on petrol and ₹18.45 per litre on diesel.
On the Prime Minister’s remark that the states should follow the spirit of cooperative federalism, Thiaga Rajan alleged that the Centre had not been dividing 20% of its revenues coming from cesses and surcharges. The Centre took away the state’s rights to taxation and put it in GST and enacted laws to conduct entrance examinations to the medical colleges built by the state, dam safety and the subjects under the state list. A state like Tamil Nadu that used to get 65 paise of every rupee of tax that went from the state, getting only 35 paise now. The Centre also had been imposing hundreds of conditions on the state to join the schemes and leaving the latter to incur full expenditure after a couple of years. "Is this federalism," the minister asked.
