Asim Dasgupta

Calcutta, June 4: The Bengal government today took the political initiative to reduce the sales tax on petrol and diesel to soften the burden of the price hike and send a message to voters ahead of the Lok Sabha polls.

The decision to forgo Rs 500 crore by slashing the tax on fuel follows the reverses the CPM suffered in the recent panchayat polls and considering that the general elections could be only a few months away.

Finance minister Asim Dasgupta cut the sales tax on petrol from 25 per cent to 20 per cent, leading to a reduction in its price by Rs 2.12 a litre.

In case of diesel, the cut is from 17 per cent to 12.5 per cent. It would lessen the hike by Rs 1.38 a litre.

The new rates will be effective from midnight.

The initiative to reduce the sales tax on fuel comes after a decade.

The CPM’s “political need’’ for the move is borne out by the cash-strapped government’s willingness to suffer a revenue loss to the tune of Rs 500 crore.

According to the finance minister, of the total sales tax collection of Rs 9,000 crore, the state earns Rs 2,000 crore from petrol and diesel.

If the state had not reduced the sales tax on petrol, it would have earned Rs 1.06 a litre more because of today’s central hike.

After the tax cut, the state government will earn Rs 2.09 a litre less now.

From diesel, the state would have got 46 paise more a litre as sales tax after the hike. With the slash, the state will earn Rs 1.36 a litre less.

Asked how he would meet the sudden shortfall, Dasgupta said: “There are plans to check the use of petrol and diesel used by state government vehicles.”

After a meeting with chief minister Buddhadeb Bhattacharjee to discuss the tax cut, the finance minister said at Writers’ Buildings: “We urge the Centre to reconsider the fuel price hike and, pending such reconsideration, our government has decided to slash the sales tax on petrol and diesel.”

“It is true that our government had not reduced sales tax on petrol and diesel in the past decade,” he added.

Failure to rise to the occasion by slashing sales tax could have cost the CPM dear in the parliamentary polls, a party MP and central committee member said.

“We had to send a positive message to the electorate after what happened in the panchayat elections. The Lok Sabha polls are near and we can’t afford to let our vote bank erode further,” he added.

Trinamul Congress leader Partha Chatterjee said the CPM was “scared”.

“It was scared of a massive erosion in its vote bank before the parliamentary polls because of the panchayat election results. But the people have seen through their game,” said Chatterjee, the leader of Opposition in the Assembly.