Balagopal rules out reduction in petrol sales tax. Opposition calls for at least fuel subsidy

Petrol pump

Finance Minister KN Balagopal told the Assembly on Wednesday that the government was not in a position to reduce the sales tax on petrol and diesel, one of the components that make up the bloated fuel prices.

The minister also rejected the UDF suggestion that Kerala should argue for including petroleum products in GST. In protest, the Opposition staged a walkout.

The minister was responding to the opposition demand that the Kerala Government should sacrifice a part of its sales tax gains it had accumulated as a result of the frequently increasing oil prices. Muslim League leader A Shamsudheen, who moved the motion seeking a discussion on the issue, said the Kerala government had pocketed an additional Rs 12,000 crore by way of sales tax on petroleum products in the last five years.

Before staging the walkout Opposition leader VD Satheesan made yet another suggestion. "If you are unwilling to forego your sales tax revenue, at least provide a fuel subsidy from the increased revenue the state had collected by way of high fuel prices," Satheesan said.

He said fishing boats and KSRTC buses could be given a fuel subsidy of Rs 10 for every litre they consume. He also wanted autorickshaw drivers and taxi drivers to be provided a subsidy for the first five or 10 litres they consume a day.

Stating the government's position, the Finance Minister said there was a huge fall in revenues. "The Centre is squeezing the states dry. They are taking away all our sources of income. The state has also taken up heavy liabilities, including the pay revision outgo, " Balagopal said.

He said the first Pinarayi government has reduced the sales tax of petrol and diesel in 2018, to 30.08 and 22.76 per cent from 31.8 and 24.54 per cent. He suggested that the government was not in a position to offer more concessions.

Shamsudheen had said that the UDF government under Oommen Chandy had sacrificed the additional income from the hike in oil prices seven times. Balagopal countered this saying that the sales tax component under the UDF tenure was still higher than during the LDF tenure under V S Achuthanandan.

The minister then launched a political attack on the Opposition saying it was the Congress-led UPA government's deregulation of the administered price mechanism that had led to such increases in oil prices.

Satheesan questioned the logic saying it was not deregulation but the BJP government's "tax terrorism" that had led to fuel price hikes. "Your criticism of the UDF regime sounds like an approval of the BJP government, " Satheesan said.

He said the crude oil prices were the lowest ever in 2016 when it dropped to 27.67 dollars a barrel. "If the UPA's deregulation was strictly followed, the price of petrol should have then fallen to Rs 10 and Diesel's to Rs 6. Instead, petrol then cost Rs 60 and diesel Rs 45," Satheesan said.

On the other hand, he said crude oil price touched a record high in 2008, during the UPA tenure when the price scaled up to 145.2 dollars a barrel. "Even then, the cost of petrol was only Rs 50.56 and diesel's Rs 34 a litre, " Satheesan said.

Earlier, Shamsudheen also said that the frequent hikes in fuel prices had nothing to do with oil companies or the UPA's deregulation of APM. "It is rising as part of BJP policy. Otherwise, why was there no increase during the election season early this year, " he said.

Satheesan said oil prices were upped 21 times in 37 days.

Opposition leader VD Satheesan
Opposition leader VD Satheesan

The Opposition also wanted the minister to fight to get fuel prices under the GST. If this is done, the opposition argued that the maximum tax that could be imposed on petroleum would be 28 per cent and the price of petrol would come down to at least Rs 70 a litre.

Satheesan said such a fall in fuel prices would also reduce the overhead costs of the government apart from the benefits that would flow to the common man.

Balagopal said liquor and petrol were the only goods on which a state had any control, hinting that Kerala would do all it could to hold on to the limited tax rights it had under the GST regime.

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