Centre slams Maya for not lowering VAT on diesel,LPG

The Centre today slammed the Mayawati government in Uttar Pradesh for not lowering Value Added Tax (VAT) on petroleum products in the backdrop of recent hike in fuel prices.

The central Empowered Group of Ministers(EGoM) had recently raised the prices of diesel, kerosene and domestic Liquified Petroleum Gas (LPG) following rising international oil prices. Simultaneously, the Centre had suggested the respective states to reduce VAT on petroleum products to provide respite to common man.

“Two per cent reduction in VAT would not have lowered the tax revenue of UP, but provided succour to people,” Union Coal Minister Sriprakash Jaiswal told the media here. Justifying the latest round of fuel price hike, he said that inflation had softened in recent weeks and people were aware of the compulsions before the Centre for increasing fuel prices. He added that if the public sector oil marketing companies were allowed to suffer losses, in the long run it would increase the rate of inflation.

Earlier, Mayawati had ruled out reduction of VAT on diesel, as the tax rate in UP was already lower than most other states. In her letter to Prime Minister Manmohan Singh during 2008-09, she mentioned that UP had lowered VAT on diesel from 21 per cent to 17.23 per cent, while VAT on LPG was waived completely. She asserted there was no headroom for cut in VAT. Instead, Mayawati had urged the Centre to rollback the latest round of fuel price hikes .

Jaiswal also alleged misuse of central funds in the health sector by the state government. “The gross misuse of funds has already led to spate of killings in the state and the fear of being exposed resulted in the murder of a deputy chief medical officer (CMO) inside jail.”