Though the Bharatiya Janata Party (BJP) at the national level participated in the Bharat bandh on Thursday in protest against the Union government for increasing diesel prices, the BJP government in the State is poised to silently enjoy a windfall from this hike, about Rs. 250 crore this fiscal.
This additional and unexpected revenue is through State’s sales tax, surcharge and entry tax components, which come to about Rs. 1.13 on Rs. 5 increase in the base price of diesel, according to sources in the public sector oil marketing companies.
With about 1.36 crore litres of diesel being sold every day in Karnataka, additional Rs. 1.13 per litre is expected to bring about Rs. 1.5 crore more revenue to the government every day.
About 480 crore litres of diesel was sold during 2011-12 in the State and the sales are likely to touch 500 crore litres this fiscal.
The Karnataka government levies 16.75 per cent sales tax, 5 per cent surcharge and 5 per cent entry tax on diesel price.
The government had brought down the rate of sales tax from 22 per cent to 16.75 per cent from April 1 this year when D.V. Sadananda Gowda was the Chief Minister.
The reduction was an attempt to bring diesel price in Karnataka on a par with neighbouring States. While petroleum dealers in Karnataka were upset over loss of business because of lower prices in neighbouring States, truck operators were concerned about high diesel prices in Karnataka, prompting the government to reduce the tax rate.
‘Reduce tax’
The All-India Motor Transport Congress (AIMTC) president G.R. Shanmugappa wondered about the double standards of the ruling BJP in Karnataka. “They are opposing diesel price hike at the national level and are not prepared to bring down the rates in Karnataka, where the tax rates are the highest in comparison to other States,” he told The Hindu.
Mr. Shanmugappa said the government will not lose anything if it reduces the tax rates as the present hike was unexpected.
He pointed out that governments in Goa and Kerala have already reduced tax rates to lessen the burden on the common man.
However, the mood in the Karnataka government does not appear to be in favour of reducing State duties. Sources in the Finance Department told The Hindu that the rates had already been reduced in April this year.
The sources said that though revenue of Rs. 250 crore appears additional or unexpected, it will become essential in the wake of increasing inflation. Tax collections have to go up as the inflation rate goes up, sources said.
