Inappropriate cess hurts financial stability of state- Fin Min

"Excise duty on petrol before 2014 was 90 percent of the total tax structure but after the BJP government came to power the excise duty was reduced to 44 percent in 2017 and to just 4 percent in 2021. Funds to state governments will be given only from excise duty but as the excise duty percentage has been reduced drastically there is severe fund crunch to the state government", said the Minister, while responding to the queries of former Minister Agri S S Krishnamoorthy, in the assembly.

Krishnamoorthy said that though DMK in its election manifesto promised to reduce the price of petrol by Rs 5 per litre and price of diesel by Rs 4 per litre there was no announcement about reduction in fuel price in the Governor's address.

Minister replied that DMK in the previous rule from 2006 to 2011 has reduced Value Added Tax (VAT) from 30 to 27 percent and moreover state government reducing tax will make an impression that state is supporting the wrong economic policies of the union government.

Krishnamoorthy then questioned whether DMK was not aware of the financial condition of the state before making the electoral promise. Minister replied that though DMK was aware of the financial conditions of the state they did not expect the second wave of COVID-19 in which the state government has spent Rs 20,000 crore which is one percent of GDP.

Minister further replied that they were not aware, before coming to power, that the central government in the name of COVID-19 has converted the entire excise duty as cess which resulted in Rs 500 crore loss.