Patna, June 28: The Bihar government today reduced the sales tax on diesel. But it was too little a balm for people.
The state cabinet effected a token reduction of 14 paise per litre on diesel, saying that the government cannot give more leverage as its tax structure was already low in comparison to other states.
Briefing the reporters after the cabinet meeting, deputy chief minister Sushil Kumar Modi said: “The cabinet has decided to reduce the value added tax (VAT) on diesel from the current 18.36 per cent to 18 per cent. The government had announced that it will reduce the tax on diesel after the Centre hiked the price of diesel and liquefied petroleum gas (LPG).
Uday Shanker Singh, president of Bihar Motor Transport Federation, termed the decision as a “drop in the ocean” and said it might not be enough to prevent transporters from effecting a flat increase of 10 per cent in bus fares and transportation costs of trucks.
Last Friday, the Centre hiked the price of diesel by Rs 3 a litre, kerosene Rs 2 a litre and a steep increase of Rs 50 on each LPG cylinder. The hike in prices became effective from Friday midnight.
Modi, who also holds the finance portfolio, made it clear that it had not taken the decision to reduce the tax on diesel following the Union finance minister Pranab Mukherjee’s directive to the states to reduce the taxes on diesel, kerosene and LPG.
On why the government had reduced just 14 paise, whereas it could have raised much more to provide relief to the masses, he said: “We have lowered the tax rates on diesel and LPG throughout five years at regular intervals. Hence, the tax rates are at lower levels in the state in comparison to other states. So we did not have much scope to give more than what we have offered.”
Stating that the reduction of .36 per cent of VAT would lead to a loss of Rs 33 crore in the current financial year, Modi said Bihar had been charging the lowest VAT on diesel in comparison to some states such as Andhra Pradesh (22.5 per cent), Maharashtra (more than 25 per cent), Kerala (24.69 per cent) Delhi (20 per cent), Bengal (25 per cent).
The finance minister said that there was 22 per cent VAT on diesel in 2006 which was reduced to 20 per cent on May 4 2006. It was again reduced to 18.36 per cent on June 4, 2008 and now the government brought it to the level of 18 per cent which is lowest.
Similarly, the VAT on petrol was reduced to 24.5 per cent from 27 per cent on June 4, 2008, Modi said, while adding that the government also reduced VAT rate twice on LPG, earlier it was 12.5 per cent which brought at 4 per cent on May 20, 2006 and again it was reduced to one per cent on June 14, 2008.
“We have been charging one per cent on LPG, whereas the neighbouring Bengal has been charging 4 per cent which it abolished completely now,” he added.
Passing the buck on the Centre, Modi said that states are not in a position to bear the burden themselves alone to offset the heat of price hike of diesel, instead the Centre should also bear the states’ burden as it is the Centre’s duty to lower the taxes and not of the states which have already been facing the financial burden of Sixth Pay Commission recommendations.
n Bus fare hike, Metro P13
