AP shrugs off PM's advice to reduce VAT on fuel

Vijayawada: Will Chief Minister YS Jagan Mohan Reddy do a favour to the consumers of fuel in the state by reducing the VAT on soaring petrol and diesel prices following the pointed advice of the Prime Minister, Narendra Modi on Wednesday? The Prime Minister was addressing the Chief Ministers of several states over rising cases of Covid-19. He asked the opposition-ruled states to reduce VAT on petrol and diesel as prices soar amid high crude oil prices.

"In order to reduce the burden of rising petrol and diesel prices, the Central government reduced the excise duty last November. We had urged the states too to reduce their taxes. Some states reduced the tax and provided benefits to the consumers but some didn't do so," said Modi.

Clearly mentioning the opposition-ruled states, the PM said, "Maharashtra, West Bengal, Telangana, Andhra Pradesh, Kerala, Jharkhand, and Tamil Nadu did not follow the advice of the Central government and people in these states are burdened with price rise."

He further said, "I request these states to do now what they should have done in November. By reducing the VAT you can lower the burden faced by the residents."

All these states mentioned by the Prime Minister should have reduced the VAT on petrol and diesel to give relief to the consumers as soon as the Central government reduced the excise duty on petrol and diesel by Rs 5 and Rs 10 respectively. Following the Centre's decision, 25 states and Union Territories, mostly ruled by BJP or their allies, had reduced VAT on petrol and diesel to give relief to consumers.

Andhra Pradesh was not one among them and it refused to heed to the advise and give relief to the consumers in the state blaming the Centre and the previous TDP regime for the high taxation.

The state government does not seem to be in a mood to slash VAT on petrol and diesel and is putting responsibility on the Centre. When the Centre reduced the excise duty, all that the YSRCP government did was attacking the Centre by maintaining that the Central government had collected Rs 3,35,000 crore as Central excise tax on petrol and diesel, but only distributed only Rs 19,475 crore as AP's share which was only 5.80 per cent of the total. The government claimed that the Centre should distribute 41 per cent of taxes collected by it to the states.

Finance minister Buggana Rajendranath Reddy had claimed in the past that the state government had not increased taxes on petrol and diesel except once.

In addition, he also defended the one rupee per litre special duty on petrol and diesel for the maintenance of roads as the government had undertaken repairs to the roads at a cost of Rs 2,205 crore last year. The government claimed that the roads had been damaged due to heavy rains and floods.

Yet another argument used by Rajendranath Reddy in the past has been that whatever high VAT was prevailing in the state on the two commodities, it was a brought forward from the previous TDP regime as it had imposed 31 per cent VAT and additional VAT of Rs 4 per litre on petrol and 22.5 per cent VAT and Rs 4 additional VAT on diesel which was simply being continued. There was also an additional burden on the people of Rs 4 per litre as a cess for pooling resources for the Capital Amaravati project that has been shelved by the government. This burden too continues till date.