Andhra rules out tax cut on petrol, diesel

June 6th, 2008 - 7:31 pm ICT by IANS  

A file-photo of Sonia Gandhi

Hyderabad, June 6 (IANS) Andhra Pradesh Friday ruled out reducing sales tax on petrol and diesel. A day after deciding to bear the entire burden of Rs.50 hike announced on each cylinder of domestic Liquefied Petroleum Gas (LPG), the state government said it would not slash sales tax on other petroleum products.

Finance Minister K. Rosaiah told media persons here that the government had already provided relief by deciding to absorb the hike on gas cylinder and it would not be possible to reduce tax on petrol and diesel.

“This can’t be done as the state requires revenues for various welfare schemes,” he said.

Chief Minister Y.S. Rajasekhara Reddy Thursday night announced at a public meeting in Guntur that the government would bear the burden of the entire hike on cooking gas.

The announcement came hours after Congress president Sonia Gandhi asked party ruled states to reduce taxes on petroleum products in order to provide some relief to people following the hike effected Wednesday.

The government was also expected to reduce sales tax on petrol and diesel. A decision was expected after the chief minister returns to the state capital from Guntur.

However, Rosaiah said the government was not in a position to give more relief.

“We have done what we could have. Every state has responded to the situation in its own way. Some states reduced taxes but ours is the only state which decided to offset the entire hike on gas,” he said.

Rosaiah said the state government would have to bear a burden of Rs.3 billion on this account.

Officials said the increased revenue on account of hike in prices of petrol and diesel would go towards absorbing the entire hike on gas.

Sales tax on petrol in the state is 33 percent, the highest in the country, while it is 22.25 percent on diesel. After the recent hike, the government will earn Rs.14.32 for every litre of petrol sold and Rs.7.03 for diesel.

Last year, the revenue from sales tax on petroleum products was Rs.45 billion.

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