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Petroleum Products
States want Centre to share duty-cut losses
Bhagyashree Pande
Tribune News Service

New Delhi, June 16
Petroleum products pricing is once again flaring up with the states demanding that the Centre should share the burden of revenue loss incurred by them. In a meeting of Empowered Group of Finance Ministers today, the states have demanded that the Centre should contribute at least 50 per cent of the Rs 8,000 crore revenue loss incurred by them in 2008-09.

Speaking to The Tribune, Punjab finance minister Manpreet Badal said the decision of hike was taken by the Centre and the states were incurring a loss, which the Centre should compensate.

The Centre had hiked prices of petrol by Rs 5 per litre, diesel by Rs 3 a litre and that of LPG by Rs 50 per cylinder with effect from June 5. Punjab has reduced 65 paise on petrol and 15 paise on diesel. The Congress-ruled Haryana has reduced the prices of LPG by Rs 13 and diesel by Re 1, incurring a loss of Rs 312 crore to the state exchequer in 2008-09.

The general feeling is that this is not the last price hike and the rise of crude oil prices in the international market will continue as is predicted. The loss of revenue to Punjab will be to the tune of Rs 75 crore on account of rollback of sales tax and VAT on all petroleum products. The total revenue to the state from petroleum products was estimated to be around Rs 1,500 crore in 2008-09.

Several of the states had taken the decision to reduce sales tax on petrol and diesel and VAT on LPG to protect the consumers from the onslaught of high price rise.

“We want 50 per cent of this loss incurred by states to be shared by the Government of India,” VAT panel chairman Asim Dasgupta said.

“We have demanded that the revenue loss of Rs 8,000 crore be compensated in remaining part of 2008-09, to partly neutralise the impact of price hike,” Dasgupta said.

While 10 out of 33 states and union territories have reduced sales tax on petrol, 15 states have reduced levy on diesel, the chairman said.

Pointing out that a wrong message is going to people that states can bear this loss, Dasgupta said, states could not take the beating further as they had limited revenue raising powers.



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