DMK-led opposition parties in Tamil Nadu today asked the state government to effect a tax cut on petrol and diesel like Kerala against the backdrop of increasing crude rates, but the latter virtually ruled it out.

Deputy Chief Minister O Panneerselvam said the "situation" in Tamil Nadu in this regard was not similar to that of Kerala. He, however, assured them that the matter would be discussed with Chief Minister K Palaniswami and a decision taken "according to the situation."

Panneerselvam’s response in the state assembly came after the opposition moved a call attention urging that the state emulate Kerala in providing some relief to the common man in the backdrop of daily revision of petrol and diesel prices.

Kerala had revised VAT on petrol from the earlier 31.8 per cent to 30.11 per cent from June 1 while for diesel, it came down from 24.5 per cent to 22.77 per cent, he said. Besides, another cess was levied above this, he said. Whereas in Tamil Nadu, VAT on petrol and diesel was 34 per cent and 25 per cent respectively, and there was no additional cess like in Kerala, he said.

After the tax revision, price of one litre of petrol in Kerala as of June 5 stood at Rs 81.01 while diesel cost Rs 73.76, he said. "At the same time, retail price of one litre of petrol in Chennai is Rs 80.84 while that of diesel Rs 72.76," he said, adding, the products cost lesser in the city than Kerala.

Further, neighbouring Andhra Pradesh and Telangana levied more VAT on petrol and diesel as compared to Tamil Nadu, Panneerselvam said. "With the global crude rates on the upswing, Indian Oil Marketing Companies (OMCs) often revise the prices accordingly. Presently, since this (crude) rate is on the higher side, prices (of petrol and diesel) are on the increase," he said.

Impact of GST

The Deputy Chief Minister said whenever global crude prices would dip, it would have a corresponding effect on the price of petrol and diesel in the country. "Therefore, revising VAT as per these fluctuations is not possible. After the rollout of GST, only the taxes on petroleum products and liquor are under state government control," he said.

Panneerselvam, who holds the Finance portfolio, said the state yet to receive GST compensation of Rs 1120 crore for the year 2017-18. He said the Centre was yet to release its share of inter-state funds from GST for that year.

Tamil Nadu has received lesser allocation from the devolution to states from the Union Finance Commission while the fund allocation made to it during the Fourteenth Finance Commission period has been "reduced," he said.

Against this backdrop, the state’s revenue deficit must also be accounted for as it stood at Rs 18,370 crore in 2017-18 while it was estimated to be Rs 19,374 crore this year, he said. "Expenses towards the state’s administration as well as implementation of projects could be met only from the government’s tax revenue and this changes from state to state," he said. "Therefore, the situation of Kerala is different from that of our state. We have to carefully analyse if we can effect a tax cut like Kerala.

I wish to state that the matter will be discussed with the Chief Minister (Palaniswami) and a decision will be taken according to the situation," he said.

Earlier, Leader of Opposition and DMK working president M K Stalin said ’skyrocketing’ prices of petrol and diesel was "severely" affecting the common man and wanted the state government to effect a tax cut.