'States have limited scope for tax reduction': BJD MP disproves BJP's demand to slash fuel prices

The remarks of the BJD leader came after the Centre decided to reduce excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre

ANIUpdated: Sunday, May 22, 2022, 05:10 PM IST
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Biju Janta Dal (BJD) Odisha MP Amar Patnaik |

Reacting to BJP's demand from the Opposition-ruled states to reduce taxes on the fuel, Biju Janta Dal (BJD) Odisha MP Amar Patnaik on Sunday dismissed the demand citing the "limited scope" for the collection of revenue for the states.

The MP further stated that the states "already have a narrow revenue-raising space" in the form of Value Added Taxes.

The remarks of the BJD leader came after the Centre decided to reduce excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre.

Speaking to ANI, Patnaik said, "The Centre collects excise duty, additional excise duty and cess & surcharge on petrol and disease while the States collect only VAT. Therefore, the Centre has much more scope and space for reducing the tax, duty & cess component on these products and they have done that ostensibly to address the issue of rising inflation in the country affecting the common man and the poor who were reeling under its impact for several months now." Highlighting Odisha's attempts to bring down the prices of fuel, the BJD MP said that Odisha was one of the few states that had reduced VAT on fuels in November 2021, the last time when the Centre reduced the excise duty.

The states have limited scope or space to reduce taxes because it affects the already narrow revenue-raising space available for the states. When the Centre reduced the excise duty last in November 2021, Odisha is one of the few states that reduced VAT even though about 10 states didn't do anything about it and even though we were just recovering from the pandemic," he said.

When asked if Odisha will reduce the VAT on fuels, Patnaik said that the Naveen Patnaik government will have to examine the resources to check if it could afford "further reduction" of VAT without having any effect on the public schemes.

"The state government will have to examine its own resource base to see if further reduction in VAT is possible or not without affecting public welfare programmes being undertaken by the government under the direction and guidance of Chief Minister Naveen Patnaik. I am sure appropriate action will be taken at an appropriate time by the state government," he said.

In a significant step aimed at providing relief to people from high fuel prices, the Centre on Saturday announced a reduction in excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre.

"We are reducing the Central excise duty on petrol by Rs 8 per litre and on Diesel by Rs 6 per litre. This will reduce the price of petrol by Rs 9.5 per litre and of diesel by Rs 7 per litre. It will have a revenue implication of around Rs 1 lakh crore/year for the government," Sitharaman said.

"I wish to exhort all state governments, especially the states where the reduction wasn't done during the last round (November 2021), to also implement a similar cut and give relief to the common man," she added.

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