P Chidambaram extends support to Kerala FM Balagopal on fuel surcharge levied by Centre

Chidambaram supported KN Balagopal when the Congress party in Kerala was staging a protest against the CPI(M)-led Left Government for not slashing VAT on petrol and diesel.

Earlier, KN Balagopal refused to reduce VAT on fuel when the Opposition moved an adjournment motion seeking tax reduction in Kerala Assembly a few days ago.

Responding to an article by KN Balagopal in a National daily, P Chidambaram tweeted that "Kerala FM has revealed some figures on taxes collected on petrol and diesel. If they are wrong, the Union FM must issue a rejoinder."

"The numbers reveal that Rs 3,72,000 crore was collected in 2020-21 as excise duty, cess and additional excise duty," he said.

"Of this huge sum, only Rs 18,000 crore was collected as basic excise duty and 41% of that amount was shared with the states. The remaining amount of Rs 3,54,000 crore went to the Centre," Chidambaram said.

"This is the model of 'cooperative federalism' practised by the Modi government !" he quipped.

"Besides, where and how and on what was this humongous amount of Rs 3,54,000 crore spent ?" the former Union Finance Minister asked.

"One part was used to fill the hole created by reducing corporate taxes and giving the corporates a bonanza of Rs 1,45,000 crore."

"Five years after the infamous demonetisation, what is the status of the lofty pronouncements of the Modi government?" he tweeted.

"Mr Modi first said that we must become a cashless economy! Within days he realized it was an absurd goal. He modified the goal to a less-cash economy!"

"At the time of demonetisation, cash in circulation was about 18 lakh crore. Today, it is 28.5 lakh crore!".

"Thanks to high unemployment and inflation, the poor and the lower middle class earn less cash and spend less cash."

"We have indeed become a less cash economy! Three cheers!," he said.

Opposition leader VD Satheesan said the State Government, which earned Rs 5000 crore as tax from the fuel price hike for the last five years, should slash VAT on fuel.

Though the Centre reduced the excise duty on fuel, the State Government is reluctant to slash VAT on it, he added.

Pointing out that frequent price hikes of fuel put additional burden on common people, he said the previous Congress Government led by Oommen Chandy waived additional tax on fuel sales seven times avoiding additional burden on common people.

Only Rs 493 crore was the additional revenue from tax on fuel during Ommen Chandy's tenure compared to Rs 5,000 crore during the last five years, he added.

However, Finance Minister KN Balagopal, who reiterated his government's stand, said reduction in VAT on fuel is not possible due to the financial crisis in Kerala.

Blaming the previous UPA Government at the Centre for handing over the control of fuel price to the oil companies, he said the previous Oommen Chandy Government raised fuel tax 13 times in Kerala.