Tamil Nadu's DMK government headed by Chief Minister M.K. Stalin may not reduce its taxes on petrol and diesel in line with the reduction in excise duty announced by the Central government as one goes by the state Finance Minister Palanivel Thiaga Rajan's statement.

On Saturday, Union Finance Minister Nirmala Sitharaman announced that the Centre will reduce the excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre.

Palanivel Thiaga Rajan

Reacting to Sitharaman's announcement, Rajan on Sunday said it is neither fair nor reasonable to expect states to reduce their taxes.

"It is pertinent to point out that the Union had never consulted the states when they increased the taxes on petrol and diesel multiple times. The exorbitant increase in taxes by the Union government has been only partially reduced through their cuts and the taxes continue to be high as compared to the 2014 rates," he argued.

Petrol. (File Photo: IANS)
Petrol. (File Photo)IANS

"The recent reduction will cause a further loss of around Rs 800 crore in annual revenue to the state. This will put a huge strain on the finances of the states, that were already burdened due to the additional expenditure incurred by them for Covid relief activities."

He said the Central government's reduction in taxes that were announced on November 3, 2021 has caused an additional loss of about Rs 1,050 crore in annual revenue to Tamil Nadu.

Rajan also recalled the reduction of Rs 3/litre of petrol on August 13, 2021, by the Tamil Nadu government resulted in a revenue loss of Rs 1,160 crore per annum.

Meanwhile former Chief Minister of Tamil Nadu and AIADMK Coordinator O. Panneerselvam recently urged Stalin to discuss with his counterpart in other states and the Union Finance Minister to bring petrol and diesel under the Goods and Services Tax (GST) net.

Recalling Stalin's demand when he was in the opposition to bring petrol and diesel under GST and DMK's senior leader, Lok Sabha member T.R.Baalu's comment that his party would support such a move, Paneerselvam said the Centre and the DMK are in the same page on this aspect.

The former Chief Minister said if petrol and diesel are brought under GST then the price per litre will come down by Rs 25 and Rs 30, respectively.

Panneerselvam said the DMK has not fulfilled its poll promise of reducing the diesel prices by Rs 4 per litre.

After the DMK came to power in Tamil Nadu, the petrol prices has gone up by Rs 17.68 per litre and that of diesel by Rs 14.29/litre and the state government is raking in higher revenue, Panneerselvam said.