Middle class to pay for drought 

Middle class to pay for drought 

Abhijit MulyeUpdated: Friday, May 31, 2019, 10:07 PM IST
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Waiving off LBT on petrol and diesel will not help the state. It will only help a handful of traders and burden levy the common man Radhakrishna Vikhe-Patil Congress Leader.

Mumbai :  The state government on Wednesday decided to levy a surcharge on petrol, diesel, cigarettes, liquor and gold for the next five months. The decision, which is expected to bring Rs. 1600 crore to the treasury, would come into force from midnight.

The state government also decided to do away with the Local Body Tax (LBT) on petrol and diesel in 27 corporations. In place of the LBT, there will be a surcharge of Rs. 2 per litre on these fuels. Also, the cigarettes, liquor and aerated drinks would now attract an additional 5% sales tax in place of LBT of 5-7%. Diamonds and gold ornaments, too, would attract an additional VAT of 1.20%, instead of the earlier 1%.

The decision taken by the state cabinet in its meeting on Wednesday is part of the efforts to raise more funds for tackling drought, finance minister Sudhir Mungantiwar said while announcing the decision.

“Untimely rains, hailstorms and, now, the drought have put the state finances under tremendous strain. On one hand, the state is losing revenue and, on the other hand, more money has to be made available for relief. The state is facing a deficit of Rs 8000 crore,” the minister said.

He justified the hike in prices of petrol, diesel, liquor, cigarettes and gold saying that “these items do not fall under essential commodities and people of Maharashtra are sensible to bear the cost for distressed farmers.”

The government needs to mop up Rs 421 crore to pay farmers for crop loss due to unseasonal rain, Rs 20 crore for repair of their houses, Rs 690 crore for crop insurance, Rs 60 crore for waiver of interest on loans, Rs 117 crore for restructuring of loans, Rs 1,072 crore for loss of crop of sprout produce farmers and Rs 950 crore for distribution of wheat and rice at Rs 2 and 3 under the Food Security bill scheme, Mungantiwar said.

He said that fuel prices would be rationalised as the LBT is being replaced by new taxes. But, he also admitted, that in places like Mumbai and rural areas, where the LBT was not applicable, the fuel and other things would be costlier.

“The petrol and diesel prices in international market have fallen by over Rs 10 and Rs 17, respectively, in the past few months. This has reduced the quantum of sales tax collected on these fuels by about 2 to 3 rupees. Hence we have decided to levy a surcharge of Rs. 2,” Mungantiwar reasoned. He also underscored that even after levying the surcharge, the fuels in the state would be cheaper than those in neighbouring states like Andhra Pradesh, Madhya Pradesh and Karnataka.

The Congress, however, has criticized the decision. Leader of opposition in legislative assembly Radhakrishna Vikhe-Patil said that through this decision the BJP government is trying to raise money to celebrate its one year in office.

“Why is the government, that had denied loan waiver to poor farmers, so prompt in announcing tax waiver worth several crores for the benefit of rich traders,” he asked.

Terming the drought relief measures undertaken by the government as a whitewash, Vikhe-Patil said that by doing away with the LBT the government has only increased its burden by Rs. 350 crores. “Waiving off LBT on petrol and diesel will not help the state. It will only help a handful of traders and burden levy the common man,” he said.

The Federation of all Maharashtra petrol distributors association (FAMPDA) too has criticized the decision of the state government to levy the surcharge. “We thank the government for abolishing the LBT. But, we strongly oppose decision to hike tax on diesel. It is government’s wrong perception that they will raise funds by this decision. We fear a reduction in diesel sale owing to which the government will lose income,” Uday Lodh, president of FAMPD, said. He also said that the organisation would agitate against the decision.

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