Bhubaneswar, June 28: To soften the impact of hike announced by the Centre on cooking gas and PDS kerosene oil on June 24, the Orissa government today waived the value added tax (VAT) on these products. The move means that LPG cylinders in the state would be cheaper by Rs 16 and kerosene by 32 paisa.
Orissa, thus, joined states like Bengal and Haryana who have made similar gestures following a public outcry against the sudden increase in the prices of petroleum products.
Union finance minister Pranab Mukherjee had also written to the state governments to reduce levies on diesel, kerosene and LPG to help consumers absorb the hike.
Announcing the waiver, chief minister, Naveen Patnaik said the government had taken the step to help the middle class and poor people who were the worst hit by the increase in the price of petroleum products.
“As a measure of relief to the people of the state, we have decided that VAT will be completely waived on LPG and PDS kerosene oil. This is the maximum possible relief that we could give on these products,” the chief minister said while refusing to extend the favour to diesel.
“As far as diesel is concerned, the state government had already reduced the VAT rate to 18 per cent sometime back, which is one of the lowest in the country. It will not be possible for a poor state like Orissa to further reduce this,” said Naveen urging the Centre to slash diesel prices which would provide some relief to the common man.
The state, which has charges four per cent as VAT on kerosene and LPG, collects Rs 38 crore annually on this account. While tax on LPG brings in Rs 20 crore, kerosene accounts for Rs 18 crore.
Sources said the government was looking for an enhanced revenue from this source during the current year having set a tentative target of Rs 45 crore.
However, the state’s chief source of earning still remains the VAT on petrol and diesel which was 18 per cent and mops up Rs 2000 crore annually. This is because of the high rates of these products and an enhanced consumer base.
Interestingly, the announcement about VAT waiver on LPG and kerosene came despite initial resistance by the state government. Finance minister, Prafulla Chandra Ghadei was reported to have said that Centre had no right to pressurise the state governments to make such sacrifices.
The Opposition parties were quick to dismiss the announcement as a superficial bid to gain cheap publicity.
“They should go ahead and further reduce the tax on diesel if they are really worried about the people,” said state Congress president, Niranjan Patnaik.
Senior BJP leader and former minister, Biswabhushan Harichandan, also called upon the government to waive the VAT on diesel completely if it was really keen to help the poor and the middle class consumers.
However, ruling Biju Janata Dal leaders, who had been secretly putting pressure on their leadership to waive the tax on LPG and kerosene because of their huge consumption base, maintained that the cash-strapped government could not be expected to extend the favour to diesel.
However, there were others who cited the example of the state government’s Rs 2 a kg rice scheme which costs the exchequer a whopping Rs 876 crore annually.
“If that can be absorbed why can’t the VAT on diesel be waived?” asked a critic.
