The government is likely to take a call on reducing the sales tax on diesel only next week.
The proposal calls for a political decision and that will be possible only after the CPI(M) leaders, away in Hyderabad attending the party's extended Central committee meeting, return to the State. The Finance Department will also have to work out the modality for giving effect to the tax relief.
Finance Minister T.M. Thomas Isaac had said in New Delhi recently that the State government would consider reducing the sales tax on diesel as had been done by the Left Front (LDF) government in West Bengal.
The West Bengal government, it may be recalled, had announced a subsidy of Re.1 for every litre of diesel used by buses, mini-buses and taxis and rolled back the 4 per cent sales tax on kerosene, effective from August 1. The State had chosen to bear a subsidy burden of Rs.110 crore with the decision to reduce the sales tax on diesel and take a Rs.50-crore hit on its revenues with the decision to roll back the tax on kerosene, measures stated to be the first of its kind in the country.
The Congress-led Delhi government had on July 16 slashed the Value Added Tax (VAT) on diesel to 12.5 per cent from 20 per cent, bringing down the fuel price by Rs.2.70 a litre to Rs.37.50 a litre in the national capital.
When contacted, Principal Secretary (Taxes) P. Mara Pandiyan told The Hindu over the phone from New Delhi on Saturday that the proposal would call for both a political decision and a methodology for application that was not cumbersome. The West Bengal decision, he pointed out, involved payment of the subsidy amount to the bus, mini-bus and taxi operators throu gh the Regional Transport Offices.
“We will have to work out a mechanism that is not cumbersome and does not result in corruption,” Mr. Mara Pandiyan said.
