Fuel on Fire: Indian states make a killing on taxes as citizens suffer

Fuel on Fire: Indian states make a killing on taxes as citizens suffer However, despite the windfall from fuel tax collections, states’ fiscal position has deteriorated over the years

Current News : Even as ordinary people feel the heat over rising fuel prices, an analysis of central and state finances by Business Standard shows that most Indian states are making a killing with fuel prices touching an all-time highs in India.

The Modi government has lobbed the ball in the court of various states to control fuel prices by slashing their respective sales tax or value-added tax (VAT) on petrol and diesel.

While certain states have reasoned that any tinkering in this department would hurt their finances, a closer look at their accounts show that despite the windfall from fuel tax collections, their fiscal position has deteriorated over the years—and this, even though state fuel taxes are ad valorem and the revenues therefrom increase or decrease every time fuel prices rise or decline.

Of the 22 large states with the highest fuel tax collections and the Union Territory (UT) of Delhi, at least 17 have seen their VAT collections from the sale of petroleum products rise by more than 30 per cent from 2015-16 to 2017-18‌Read more