Amid mounting pressure to reduce the tax collected by the State on petrol and diesel, Finance Minister K.N. Balagopal made it clear on Friday that the Government had no plan to go for a cut.
Mr. Balagopal justified the State’s decision on the grounds that the Centre, which announced Central excise duty cut of ₹5 on petrol and ₹10 on diesel on Wednesday, had in fact reduced only a fraction of the large sum it collected by way of special tax and cess.
Mr. Balagopal said the State Government had not hiked fuel tax in the past six years. On the other hand, the Congress-led UDF Government under Oommen Chandy had raised it 13 times. Moreover, unlike many other States, Kerala had neither hiked the fuel tax or imposed a cess during the COVID-19 pandemic, he pointed out.
Mr. Balagopal termed excise duty cuts by the Centre as a ''temporary face-saving measure'' in the light of the nationwide protests against spiralling fuel prices.
The Centre is collecting more than ₹30 as special tax and cess per litre of petrol and diesel. In reality, the reduction announced by the Centre constituted only one-sixth of the hiked special tax in the case of petrol and one-third in the case of diesel, he said.
Mr. Balagopal accused the Centre of misinterpreting Article 271 of the Constitution to collect revenue which need not be shared with the States. Article 271 deals with 'surcharge on certain duties and taxes for purposes of the Union.'
On petrol, Kerala collects 30.08% as sales tax, ₹1 a litre as additional sales tax and 1% cess. On diesel, this is respectively, 22.76%, ₹1 a litre additional sales tax and 1% cess.
In Kerala, the price of petrol stood at ₹104.46 a litre and diesel ₹91.72 on Friday. In neighbouring Karnataka, where the State Government had reduced the price of petrol and diesel by ₹7, it stood at ₹100.14 and ₹84.60 respectively.
In announcing the cuts, the Centre had urged States to commensurately reduce VAT on petrol and diesel to provide relief to consumers. The LDF Government has come under intense pressure from the Congress-led UDF and the Bharatiya Janata Party (BJP) to reduce the tax charged by it on both fuels.