Centre must reduce taxes on fuel, states have limitations: Tamil Nadu finance minister to Sitharaman

Chennai (Tamil Nadu) [India], August 3 : State governments have limited resources and not enough opportunities to raise revenues so it is the Centre that should reduce taxes, Tamil Nadu Finance Minister Palanivel Thiagarajan said responding to Union Finance Minister Nirmala Sitharaman's question as to why states did not reduce cess on fuel even as they talked about price rise.
Sitharaman had said in the Parliament that state governments did not reduce taxes on petrol and diesel while the Centre had done so on its part.
Responding to Sitharaman, Thiagarajan said the government of Tamil Nadu had already reduced taxes on petrol by Rs 4.95. The Union government's levies on petrol on the other hand have gone up substantially in the last 7 years, he claimed.
"Though the revenue of the Union Government has increased by several lakh crores, there has not been a matching increase in the revenues of the states. This is because the Union government has increased the cess and surcharge on petrol and diesel while reducing the basic excise duty that is shareable with the states," Thiagarajan said.
Over the last seven years, the Union government has increased the taxes on petrol by Rs 23.42 per litre and Rs 28.23 per litre on diesel.
The Union government's reduction in taxes in November 2021 and May 2022 together was Rs 13 on petrol and Rs 16 on diesel. Though the Union government has reduced the taxes, it is still higher than the 2014 rates by as much as Rs 10.42 per litre for petrol and Rs 12.23 per litre for diesel, he added.
Therefore, there is a need for the Union government to further reduce its taxes on fuels, he said.
"The Union Government's reduction in taxes that were announced on 03.11.2021 will cause an additional loss of about Rs 1,050 crores in annual revenue to Tamil Nadu. The reduction in May 2022 will cause a further loss of Rs 800 crores in annual revenue to the State."
On the latest revision in GST on some essential articles, he said it will adversely affect the common man and Tamil Nadu had sent its objections through a letter.
From July 18, pre-packaged and labelled pulses, and cereals like rice, wheat, and flour (atta) will attract 5 per cent GST when branded and packed in a unit container, whereas curd, lassi, and puffed rice would attract 5 per cent tax cent when pre-packaged and labelled. The recommendations on these GST rates were made during the 47th GST Council meeting held in June,
"After the introduction of GST, the state's power to levy taxes has been reduced greatly. There are not enough avenues for the state to augment its revenues," the minister said. Therefore, it is the Union government which has the resources to help the common man by reducing the taxes, he added.