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Last Updated Thursday June 21 2018 09:32 PM IST

State will take a call if Center cuts fuel tax by half, says Thomas Isaac

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State will take a call if Center cuts fuel tax by half, says Thomas Isaac Kerala finance minister Thomas Isaac. File photo

Alappuzha: The state government will consider slashing the sales tax or VAT on petrol and diesel if the center invites it for talks after effecting a cut in the basic excise duty on these fuels at least by half, Kerala finance minister Dr T.M. Thomas Isaac has said.

He was responding to minister of state (independent charge) for petroleum and natural gas Dharmendra Pradhan's charges that Kerala was not doing its bit to protect the interest of common man by bringing down fuel prices.

"The state levies like excise duty, service tax and VAT come around half of the Central tax receipts from petrol and diesel. The basic price of petrol processed in Indian refineries is Rs 31.70 per liter. Though the finance ministry reduced the basic excise duty on petrol to 61 percent or Rs 2 a liter recently, the central tax still is substantial at Rs 19.48 per liter, whereas the state levies only 34 percent of tax.

"For diesel, as much as 49 percent of the retail selling prices continue to go to the center government as taxes, while the state collects only 25.6 percent as tax. Also, the center levies a tax of Rs, 15.33 per liter for diesel, which has a basic price of 31.28 a liter," the minister said.

According to him, fuel prices in Kerala have not increased compared to that of the states ruled by the Bharatiya Janata Party (BJP).

Despite the sharp fall in global crude prices, the Center chose to raise excise duty with an objective to take away gains instead of passing on the benefits to consumers. It also allowed oil marketing companies to reap a windfall. Such actions cannot be justified.

If the Center attempts to resolve the existing economic crisis without bringing fuel prices down, it would result in higher inflation rates, the minister pointed out.

Calling on all political parties to unite in protest to urge the Center to reduce fuel taxes, Isaac said the government was ready to sit together with the Opposition to chart out agitation programs.

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