Chief Ministers and ministers from states ruled by BJP rivals Wednesday reacted sharply to Prime Minister Narendra Modi’s comments that states ruled by them had not reduced value added tax (VAT) on petrol and diesel despite the Centre slashing excise duty and they should do so at the earliest in order to benefit the consumers.
“We wanted prices of petroleum products to be reduced but the Prime Minister is asking the States to reduce the taxes. From where will we do that?” West Bengal Chief Minister Mamata Banerjee asked.
She said that the Union owed ₹97,000 crore to the state and even if half of the amount was disbursed to the state, then it could reduce the VAT on petroleum.
She claimed that her government was giving a ₹1 reduction on VAT on petroleum products, which has cost ₹1,500 crore to the State exchequer.
“Since coming to power, the Narendra Modi government has raised ₹17,31,242 crore through excise collection on petroleum products. Of the money collected through central taxes, only 25% was given to the states,” Banerjee added.
Banerjee’s Maharashtra counterpart, Uddhav Thackeray also pointed out how much the Union owed their respective states.
“The Union government owes ₹26,500 crore to the Maharashtra government. Maharashtra’s contribution in direct tax collection at the national level is 38.3% and its share in the GST (collection) is 15% , but the Union gives us stepmotherly treatment,” Thackeray said.
He went on to say: “Today in Mumbai, behind every litre of diesel, the Central VAT is ₹24.38 while the State VAT is ₹22.37. In petrol, ₹31.58 is the Centre’s tax while the State tax is ₹32.55.”
According to Kerala’s Finance Minister K Balagopal, Narendra Modi’s VAT remark was misleading and he said that instead of asking resource-starved states to slash their limited income source, the Union should put a stop to collecting the cess and surcharge on petrol and diesel.
“Kerala has not hiked the sales tax on petrol and diesel in the last six years. It is one of the few States which has not done so. So what is it that we should reduce?” he asked.
“The Prime Minister expects the States to reduce VAT on petrol and diesel without first giving an account of the Central Excise, through which the Union government has earned ₹27 lakh crore in the last eight years,” said Congress spokesperson Pawan Khera.
During a virtual interaction with Chief Ministers, Prime Minister Narendra Modi pointed out that the Union had urged the states to reduce taxes but several of them had not done so.
Maharashtra, West Bengal, Telangana, Andhra Pradesh, Kerala, Jharkhand and Tamil Nadu for some reason or the other have not passed on the benefit to consumers, he said.