Petrol prices is the subject that is close to the hearts of Indians. And why wouldn’t it be? Petrol prices directly affect the cost of other goods and services in the country which invariably puts an extra burden on the pockets of citizens. In recent times, India has witnessed petrol and diesel prices sky-rocketing to unprecedented heights. Netizens have been actively voicing their unhappiness with rising fuel prices. But till now, all governments in the country are trying hard to manage their finances, amid the pandemic. Demand for fuel prices was kind of unheeded. But as it happens, a state government might have decided to give some solace to brazen hearts of people and reduced the taxes by Rs. 3/litre
Tamil Nadu decides to reduce state tax by Rs. 3/litre
Tamil Nadu Finance Minister P Thiaga Rajan announced that the state has decided to let go of tax on petrol by Rs 3 per liter as part of the 2021-22 state budget. The tax reduction will cause a loss of Rs 1,160 crore a year to the Tamilnadu state exchequer.
Earlier this year, in February 2021, states like West Bengal, Assam, Rajasthan, and Meghalaya had decided to cut taxes on fuel. But it must be noted that Tamil Nadu is the first state to have cut fuel taxes in the financial year of 2021-22. This move could lead to larger political turmoil throughout the country.
Political Environment might witness turmoil in upcoming days
Even though fuel prices have been on the rise, for a while now, the country hasn’t witnessed a strong protest from the opposition. The main reason for this is, if the opposition decides to protest against fuel prices, the center will be compelled to ask the opposition to walk the talk in opposition-ruled states. Given the perilous state of finances of all states (because of the pandemic) it will be hard for any government to give away its major source of income.
But as TN has decided to take the tax cut, now other opposition-ruled states might also follow the suit. The question is whether these steps will be able to put enough pressure on the center or not. If the opposition plays its all cards correctly, we might witness a tax cut by the central government as well.
Central and state-level taxes make up about 55 percent of the retail price of petrol and 51 percent for diesel. Apart from central and state taxes, freight charges and dealer commissions also add to fuel prices.
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