Finance Minister Sashi Bhusan Behera on Saturday turned down the appeal of Union Petroleum Minister Dharmendra Pradhan to the States to reduce VAT by 5 per cent on fuel and said the Odisha Government would not decrease VAT on petrol and diesel.
Behera said that out of the Rs 2 reduction in Excise Duty by the Centre, the State Government is bearing a loss of 84 paise at the rate of 42 paise per rupee. Moreover, the State is also losing 52 paise which it would have collected as VAT at 26 per cent on that Rs 2, he stated.
Hence, State is incurring a total loss of Rs 1.36 after the Centre reduced Excise Duty on petrol and diesel by Rs 2 per litre. So, the question of cutting VAT does not arise when the State is bearing more loss than the Centre due to Excise Duty reduction, asked Behera.
He further added, the Centre increased the fuel prices even though the prices of crude oil reduced in the international market.
Notably, after cutting the Excise Duty by Rs 2 per litre on petrol and diesel, the Centre had urged all the States to cut VAT by 5 per cent to ease the stiff burden on consumers.
But no other State including BJP-ruled States have reduced VAT as they earn a major chunk of their revenue from fuel.