Kochi: The state government will not reduce the value added tax on fuel further, Kerala's Finance Minister KN Balagopal said on Thursday after the centre slashed excise rates on fuel.
The VAT on fuel prices charged by the state were automatically reduced in proportion to the excise duty. However, there will be no cut in the VAT rate of the state.
"For the past six months, the Centre was collecting almost Rs 30 as special excise duty and cess from every consumer for a litre of petrol. The Centre has not offered the states any proportionate sum from this pool. The excise rates were slashed after massive protests. Kerala will witness a simultaneous fall in fuel prices but not more," the minister said.
"The Centre is like a pickpocket who offers pocket money after robbing a man. There is a limit to the reduction which can be offered by the state," he added.
The minister defended the government's decision by citing the poor financial situation of the state.
The finance minister further said the Left government in Kerala has not increased the State tax on petrol and diesel for the last six years.
In fact, the State tax was reduced once during this period, he added.
He said the Centre should immediately reduce the Rs 30 additional levy on petrol and diesel to help the people.
The Government of India on Wednesday announced an excise duty reduction on petrol and diesel. Excise duty on Petrol and Diesel was reduced by Rs 5 and Rs 10 respectively.
On Thursday, petrol was valued at Rs 103.80 while diesel was recorded at Rs 91.59 in Kochi. The excise duty on petrol had been reduced by Rs 5 ($0.0671) per litre. With an additional Rs 1.30 (30.08% VAT charged by the state) also being reduced, petrol has become cheaper by Rs 6.30.
For diesel, in addition to the announced reduction of Rs 10 ($0.1342) per litre, Rs 2.27 that was VAT has also been reduced.
The central government had urged the states to provide relief to consumers by reducing the value added tax on petrol and diesel.
The Kerala Assembly on Tuesday had witnessed a war of words between the CPI(M)-led ruling front and the Congress-headed opposition over frequent fuel price hike in the country and the latter walked out of the House terming it as "State-sponsored tax terrorism."
Though the LDF government maintained that it was the Centre and not the State government which was responsible for the fuel price hike, the UDF members wanted it to forego the additional tax revenue generated on its sales for the sake of struggling commoners.
Meanwhile, the UDF clarified that it will resort to more protests if the state government refuses to lower the VAT rate.
