Indian FM writes to CMs for cut in taxes on petrol

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June 5, 2012

Amid his pitch for a 25 percent cut in taxes levied on petrol by states, Finance Minister Pranab Mukherjee on Monday said he has written to chief ministers to reduce taxes by states and put in place a mechanism to contain it if petroleum prices continue to rise.

June 5, 2012

Amid his pitch for a 25 percent cut in taxes levied on petrol by states, Finance Minister Pranab Mukherjee on Monday said he has written to chief ministers to reduce taxes by states and put in place a mechanism to contain it if petroleum prices continue to rise.

Announcing at the CWC meet that he had written to chief ministers, Mukherjee said he has sought their cooperation in making their "sacrifice" of tax revenue to help bring down prices of petroleum products and said "nothing was possible" without their agreement.

"I have written to chief ministers of various states indicating how much revenue is collected by respective states and how much revenue is collected by the central government in the form of excise duty from that state," he told reporters after the CWC meeting. Noting that all stakeholders will have to "make sacrifices" in case international prices of petroleum products continue to rise, Mukherjee said it was upto the states to help the Centre work out a mechanism in such a situation.

"I have written to them. Of course, it is for their consideration, what they would like to argue. And thereafter, if they agree, then we can work out in consultation with each other… A mechanism," Mukherjee said. He said that "without the consent of chief ministers and without their agreement, nothing is possible." Earlier at the CWC meeting, Mukherjee justified the high price of petrol citing hike in international crude prices and made out a strong case for a 25 per reduction of taxes levied by states on petrol to bring down its price.

The Finance Minister, however, felt happy international crude prices were coming down and were now below the 100 Dollar-mark. "Fortunately, the international prices (of crude) have started coming down and Brent Crude has come down, which is the main source of our energy supply. It has come down to below 100 Dollars per barrel, which reached 127 Dollars maximum and throughout the year it was an average of 110 Dollars per barrel," he said.

Mukherjee said petroleum prices were discussed at the meeting and "naturally, nobody is happy at the increase of prices of petroleum products. I explained to them and I also informed the members that I have written to chief ministers" to reduce taxes on petrol. Explaining the reason for writing to CMs, Mukherjee said "while replying to the debate on the Finance Bill in the Lok Sabha, I had mentioned that if petroleum prices go on increasing and there is no reduction and then how to tackle and there my suggestion was that in that eventuality all stakeholders will have to make sacrifice.

"Because it is not possible to pass on the entire enhancement to consumers nor it is possible to absorb the entire increase by providing subsidies. So I announced that I am contemplating of writing to CMs. I have written to them." Corruption and price rise were the key issues during the discussion at the CWC. Kerala PCC president Ramesh Chennithala attacked the oil marketing companies for raising petrol prices, especially at a time when Kerala was witnessing an assembly by-election that had put the party in trouble. He wanted the government to take back the power to decide oil prices from oil marketing companies.


Courtesy: ET