Prime Minister Narendra Modi today requested states to reduce the Value Added Tax (VAT) on fuel “in the spirit of cooperative federalism”. Listing fuel prices in cities across the country, PM Modi pointed out that states which had lowered VAT have lower fuel prices. Stressing the spirit of cooperative federalism enshrined in the Constitution, he said the country strongly fought a long battle against Covid through that spirit and must also do the same for economic issues given the impact of global issues like the ongoing “war-like situation”.
“Let me give you a small example. The Centre reduced the excise duty on petrol and diesel last November to reduce the burden on the citizens. We also requested the states to reduce their taxes and transfer the benefit to the people. Some states reduced taxes but some states did not give any benefit from this to the people. Due to this, the prices of petrol and diesel in these states continue to remain high. In a way, this is not only an injustice to the people of these states but it also has an impact on neighbouring states,” PM Modi said.
“I am not criticising anyone, just discussing,” the PM said while listing out the states that did not reduce VAT on fuel during the steep hikes.
The PM said it’s natural that those states that reduce their taxes will suffer losses in revenue but several states took that “positive step” anyway.
“Had Karnataka not cut taxes, it would have collected an additional over Rs 5,000 crore in revenues during the last six months. Gujarat would also have collected Rs 3,500-4,000 core more,” he said.