The Hindu : Karnataka / Bangalore News : Fuel taxes proving costly for State

Online edition of India's National Newspaper
Friday, Dec 01, 2006
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Karnataka

Karnataka - Bangalore

Fuel taxes proving costly for State

Anil Kumar Sastry

Karnataka losing Rs. 360 crore a year to neighbouring States

BANGALORE: Karnataka is losing revenues of about Rs. 360 crore a year because fuel prices here are higher than in the neighbouring States.

This is because Karnataka alone levies a 5 per cent entry tax apart from other taxes.

The tax component of each litre of diesel and petrol in the five States is as follows.

Karnataka - Rs. 7.5 and Rs. 13.3 respectively; Tamil Nadu - Rs. 6.5 and Rs. 11.12; Andhra Pradesh - Rs. 6.26 and Rs. 12.3; Kerala - Rs. 6.75 and Rs. 10.6 and Maharashtra - Rs. 7 and Rs. 11.2.

Inter-State trucks consume the maximum quantity of fuel and they prefer to fill the tanks across the border, according to Bhushan Narang, president of Petroleum Dealers' Association of Karnataka. This directly results in loss of revenue.

Sales affected

The sale of high-speed diesel (HSD) each month in Karnataka is two lakh kilolitres, which could have been 2.2 lakh kilolitres had the price been competitive, according to industry estimates.

Oil companies in the State fear decrease in sales by another 20,000 kilolitres as the sales tax component of HSD in Maharashtra was recently slashed by 10 per cent. As a result, Karnataka, which already loses Rs. 15 crore revenue a month, is expected to lose Rs. 15 crore more from Friday.

A litre of diesel costs Rs. 36.39 and petrol Rs. 52.92 in Bangalore, Rs. 34.41 and Rs. 49.67 in Chennai, Rs. 34.60 and Rs. 47.98 in Kochi, Rs. 34.28 and Rs. 46.41 in Panaji and Rs. 35.05 and Rs. 49.12 in Umarga, a town in Maharashtra just across the Karnataka border.

Mr. Narang said that unless the prices were equalised, sales of fuel would continue to be lower than other States.

Illegal trade

Not only inter-State truckers, but also people living in border areas buy fuel from neighbouring States. Besides, unequal pricing encourages illegal trade in fuel, cautioned an oil company official.

Equalisation in fuel pricing among southern States would benefit all of them equally, he said.

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