Bangalore: The increase in prices of petroleum products has put pressure on State governments to reduce their levies on petroleum products.
In Karnataka, which imposes highest tax on fuel in the country, the pressure is more intense.
Chief Minister B.S. Yeddyurappa has promised to take a decision soon but there is speculation over the extent of a possible reduction in taxes – particularly the sales and entry taxes.
One of the most important considerations which appears be delaying the decision is the fact that petroleum products are an important source of revenue for the State.
Speaking to The Hindu, the Principal Secretary, Finance, M.R. Srinivasa Murthy said, “Revenues from petroleum are very important for most States.” About 20 per cent of all commercial taxes in the State – that is, Value Added Tax (VAT) and Sales Tax – comes from petroleum products.