Jaitley rules out reduction in excise duty on petrol, diesel

New Delhi, June 18

Union Minister Arun Jaitley on Monday urged citizens to pay their due share of taxes “honestly” to reduce dependence on oil as a revenue source, and virtually ruled out any cut in excise duty on petrol and diesel saying it could prove to be counter-productive.

While salaried class pay their due share of taxes, Jaitley said "most other sections" have to improve their tax payment record, which is keeping India "far from being a tax-compliant society".

"My earnest appeal, therefore, to political leaders and opinion makers ...would be that evasion in the non-oil tax category must be stopped and, if people pay their taxes honestly, the high dependence on oil products for taxation eventually comes down. In the medium and long run, upsetting the fiscal maths can prove counter-productive," Jaitley said.

In a facebook post titled ‘The Economy and the Markets Reward Structural Reforms and Fiscal Prudence’, Jaitley said in the past four years, the Central government's tax-GDP ratio has improved from 10% to 11.5%. Almost half of this, 0.72% of GDP, accounts for an increase in non-oil tax-GDP ratio.

The level of non-oil taxes to GDP at 9.8% in 2017-18 is the highest since 2007-08 — a year in which our revenue position was boosted by buoyant international environment, he said.

"This government has established a very strong reputation for fiscal prudence and macro-economically responsible behaviour. We know what happened during the Taper Tantrum of 2013. Fiscal indiscipline can lead to borrowing more and obviously increase the cost of debt.

"Reliefs to consumers can only be given by a fiscally responsible and a financially sound Central government, and the states which are earning extra due to abnormal increase in oil prices," Jaitley said.

In an apparent dig at senior Congress leader P Chidambaram's remark that tax on oil should be cut by Rs 25 per litre, Jaitley retorted "this is a 'trap' suggestion".

Without naming Chidambaram, Jaitley noted that the "distinguished predecessor" had "never endeavoured to do so himself." "It is intended to push India into an unmanageable debt — something which the UPA government left as its legacy.

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• The government is committed to meeting the fiscal deficit target of 3.3% for the current fiscal despite it being an election year, Finance Minister Piyush Goyal said on Monday

• He also said there will not be a spending cut to meet the target as the government has enough alternative resources for planned expenditure

• Fiscal deficit stood at 3.53% of the GDP, broadly in line with the government’s revised estimates for 2017-18

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