The Tamil Nadu led by Dravida Munnetra Kazhagam government on Friday had announced the reduction in the price of petrol across the state by rupees 3 per litre with a tax cut.
Finance Minister Palanivel Thiaga Rajan while presenting the DMK led government’s Budget, said the decision will cost the state exchequer of rupees 1,160 crore a year.
Thiaga Rajan announced, “I am happy to inform the House that this government has decided to reduce the effective rate of tax on petrol by Rs 3 per litre and thereby provide major relief the toiling working class people in the state."
He said that the MK Stalin, the Chief Minister of Tamil Nadu “feels the pain of the working poor and the middle class."
Fuel rates varies from state to state depending on different local taxes such as VAT and other freight charges. As of Friday, petrol in Chennai cost rupees 102.49 per litre before the tax cut was announced.
Petrol and diesel rates have been rising since May 4 and have increased 41 times.
The minister blamed the Union government for the rise in fuel prices, and said it was the responsibility of the central government to provide relief to consumers.
As per Ministry of Petroleum and Natural Gas data, the Union government taxes on petrol went up from about rupees 9.48 per litre in April 2014 to rupees 32.9 per litre in May 2020, which is nearly 250 per cent increase.
While, central taxes on diesel also went up from rupees 3.56 per litre to rupees 31.8 per litre over the same period which is a nearly 800 per cent increase.
Thiaga Rajan said the central has been tremendously benefitted from the rise in taxation on petroleum products at the cost of states.
The state Finance Minister said that this dilution of the spirit of federalism more apparent than in the taxation of petrol and diesel at the pump.
Fuel prices reduction was one of the key poll promises made by the DMK government during the state Assembly elections in April, 2021.
The political party had promised before elections to reduce prices of petrol and diesel by rupees 5 and rupees 4.