Thiruvananthapuram: Finance minister T.M. Thomas Isaac said that reducing the sales tax on petroleum products was a burden that the state could not bear at the moment. Nonetheless, he did not rule out a reduction in the near future.
“After assessing the fiscal situation, and if as we expect the GST collections improve, we will take a suitable decision in future,” the minister said while responding to an adjournment motion on the issue moved in the Assembly on Wednesday.
The minister upended the UDF claim that it had reduced sales tax whenever fuel prices had shot up.
“True, you had reduced sales tax four times, but prices were revised upwards 18 times during your period. Why couldn’t the UDF reduce prices when the last 13 upward revisions were carried out,” he asked.
Dr Isaac argued that the UDF was not in a position to do so because by then tax growth had fallen to 10 per cent from a high of 22 per cent during the first two fiscals under the UDF.
“The phenomenon of low tax growth still persists,” he added, underlining why it was not possible to reduce sales tax.
Congress MLA Thiruv-anchoor Radhakrishnan, while moving the motion, said that the finance minister should approach the issue humanely. “You made a song and dance about prices being revised 18 times when we were in power, but what you seem to have forgotten is that after you came to power the prices were pushed up 59 times in the case of petrol and 57 times in the case of diesel. We had the heart to reduce prices at least four times,” he said.
Dr Isaac retorted that the UDF government, though it had reduced sales tax, had also increased the sales tax whenever the prices had fallen to sustain a revenue neutral rate. “By the time the UDF left power, the sales tax, which at one point during their tenure was 23.7 per cent, was pushed up to 31.8 per cent. If the additional sales tax of '1 per litre was also factored in, the effective rate was 33.4 per cent,” the minister said.
Dr Isaac, but blamed the Centre for high fuel prices. “The BJP came to power at a time when crude oil prices started to decline. But to sustain the prices at a higher level, the Centre kept increasing the excise duty on fuel from Rs 9.7 to Rs 21.28 per litre,” the minister said. As a consequence, the revenue from oil soared to Rs 2.42 lakh crore in 2016-17 from Rs 99,000 crore in 2014-15.
