Kerala has not hiked the tax on petrol and diesel even once in the past six years, Finance Minister K.N. Balagopal said on Wednesday, reacting sharply to Prime Minister Narendra Modi's criticism of States, including Kerala, for not reducing the tax on petrol and diesel.
Mr. Balagopal indicated that Mr. Modi's stance on the matter was misleading and detrimental to the State's interests. Instead of asking resource-starved States to slash their limited income source, the Centre should put a stop to collecting cess and surcharge on petrol and diesel, he said.
‘’Kerala has not hiked sales tax on petrol and diesel in the past six years. It is one of the few States which has not done so. So what is it that we should reduce? After the Left Democratic Front came to power, tax was reduced on one occasion. After that it was never increased and everyone knows that in the current scenario, we cannot even consider a hike. But people in responsible positions in the Centre are making statements which could mislead the public,” Mr. Balagopal said.
The State government will convey its stance on the matter to the Prime Minister and the Central government in addition to raising it at the relevant forums, he said.
Over the past several years, the Centre has frequently hiked the tax on fuel. From ₹7 in 2017, the Centre has hiked it to ₹31 now, he said.
The Centre is collecting cess and surcharge unfairly. In doing so, it is encroaching on the rights and powers of the States and violating the basic tenets of the Constitution, Mr. Balagopal said.
The Prime Minister should not have brought politics in the issue, he added.
On petrol, Kerala collects 30.08% as sales tax, ₹1 per litre as additional sales tax and 1% cess. On diesel, this is respectively, 22.76%, ₹1 per litre additional sales tax, and 1% cess.
On Wednesday, while interacting with Chief Ministers on the COVID-19 situation, Mr. Modi pinpointed several non-BJP-ruled States, including Kerala and Tamil Nadu, for not reducing value-added tax on diesel and petrol. While the Centre had reduced excise duties, some States did not reduce the taxes to ease the burden on the people, he said.