Income tax surchage mooted to tide over fuel price tangle (Lead)May 28th, 2008 - 12:16 am ICT by admin
New Delhi, May 27 (IANS) The government is considering a new surcharge on income tax to bail out oil marketing companies reeling under spiralling global crude prices after a move to hike fuel prices was put in abeyance. Petroleum and Natural Gas Minister Murli Deora Tuesday met Prime Minister Manmohan Singh to press for an urgent decision on revising domestic fuel prices. Congress chief Sonia Gandhi has reportedly said that a price hike may be unavoidable.
The proposal for a surcharge on income tax was discussed at a meeting between Deora and Finance Minister P. Chidambaram Tuesday as the government found the move to hike fuel prices politically explosive and unacceptable to several parties within the ruling coalition, including the Left parties.
“We discussed so many options available. Nothing has been decided,” Deora told reporters after meeting Chidambaram here.
“Hopefully, a decision will be taken soon,” he said, even as estimates put the revenue loss for state-run oil companies at Rs.200 billion ($5 billion) for this fiscal on account of keeping the prices of cooking and transport fuels artificially low.
According to petroleum and natural gas ministry sources, another option put forward to the finance ministry was a cut in import tariff on crude oil and excise duty on transport and cooking fuels, but this proposal was summarily rejected by Chidambaram.
In his meeting with Manmohan Singh, Deora reportedly asserted that a decision on price rise had to be taken immediately, with oil companies having only a limited ability to absorb oil bonds.
“I don’t have anything to say,” Deora told reporters after meeting the prime minister.
But he may have finally got some political support, with TV reports saying that Congress president Sonia Gandhi said that a price hike may be unavoidable in the current circumstances.
The petroleum and natural gas ministry had proposed to raise petrol prices by Rs.10 a litre, diesel by Rs.5 per litre and that of cooking fuel by Rs.50 per cylinder to cut losses being incurred by three state-run firms - Indian Oil, Bharat Petroleum and Hindustan Petroleum.
But the Left parties that prop the United Progressive Alliance (UPA) government have categorically said they will oppose any move to hike prices of transport and cooking fuels since the average citizen is already burdened by high inflation.
“There is no question of accepting any hike in the fuel prices,” Communist Party of India-Marxist (CPI-M) general secretary Prakash Karat told reporters over the weekend, soon after the proposal was mooted by the government.
Last week after global crude oil prices reached $135 a barrel, Petroleum Secretary M.S. Srinivasan said a domestic price rise was “inevitable”.
According to the petroleum and natural gas ministry, petrol was being sold at a loss of Rs.16.34 a litre, diesel at Rs.23.49 per litre, LPG at Rs.305.90 per cylinder of about 14 kg, and kerosene at a discount of Rs.28.72 per litre.
The government last hiked fuel prices in February when it raised petrol price by Rs.2 and that of diesel by Re.1.
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