The Hindu : National : States ask Centre for data on revenue accrual due to price hike

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Friday, Jun 16, 2006

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States ask Centre for data on revenue accrual due to price hike

Special Correspondent

Deora's request will be considered after receiving data, say State Finance Ministers

New Delhi: State Finance Ministers have decided to ask the Central government whether a cut in excise duty on petrol and diesel is being considered in light of the Petroleum Minister's requests for reducing sales tax on these fuels. They have also sought data on the revenue accruing to the Central exchequer as a result of the latest price hike of these petroleum products.

Disclosing this here on Thursday, the chairman of the empowered committee of State Finance Ministers on VAT (value added tax), West Bengal Finance Minister Asim Dasgupta said a unanimous decision was taken to ask the Union Finance Ministry whether it was considering a cut in excise duty on petrol and diesel.

Speaking to reporters after the committee's meeting, he said the Finance Ministry should also provide information about the determination of domestic basic prices of petroleum products in relation to international crude prices. He said Petroleum Minister Murli Deora's request for cutting sales tax would be considered after the committee was given information on these issues.

He emphasised that the decision of the empowered committee was "unanimous" with even the Delhi Finance Minister being present at the meeting while the Maharashtra Finance Minister was contacted on the phone. Delhi and Maharashtra are among the several Congress ruled States that have already announced cuts in sales tax on the increase in petrol and diesel prices. Tamil Nadu has also agreed to a cut in diesel prices. The Left and NDA-ruled States have not yet agreed to Mr. Deora's proposals and instead have suggested that excise duties be slashed.

Mr. Dasgupta said the VAT committee also did not accept Mr. Deora's plea to decrease the uniform floor rates on petrol and diesel to 12.5 per cent from current 20 per cent.

He noted that petrol and diesel have not been brought under VAT since their prices are not market determined.

On revenue collections in States that have switched to a VAT system, he said these have risen up to 23 per cent in the first two months of the current fiscal against 14 per cent in the first quarter. Describing the trend as a very good sign, he said it was as per the anticipation of the VAT panel with the first year's revenue growth expected to be higher and the second year's even higher. In addition, he said registration of traders has increased by over 30 per cent.

He clarified that the deviation among States on VAT rates was within 3 per cent of total commodities. He said a provisional list of VAT schedule rates has been prepared and States have been asked to respond this month itself. Subsequently, he said a decision would be taken on removing even this 3 per cent deviation.

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