Govt to pull off first 'surprise' in state budget: Fuel cess likely to be withdrawn

THIRUVANANTHAPURAM: The government may withdraw the fuel cess in the state to reduce the impact of oil companies increasing petrol and diesel prices frequently. There are indications that this decision will come as a surprise in the first budget of the UDF government.

The state is collecting an additional Rs 3 per litre of petrol and diesel, including a one per cent tax cess and a Rs 2 social security cess. The state budget is due on June 19th.

Petrol and diesel prices have increased by Rs 10 in the past one and a half months. Chief Minister V.D. Satheesan, who is in charge of the finance department, had assured that a sympathetic decision would be taken after studying the impact of the price hike.

The state introduced a cess of Rs 2 each on petrol and diesel in the 2023-24 budget to raise funds for the distribution of social security pensions. The cess reached Rs 3 after it was decided to continue the one per cent cess on sales tax imposed in the name of compensating for the economic losses during the floods.

The fuel cess has reportedly backfired. Although the number of vehicles is increasing every year, fuel sales have not increased proportionately. The revenue received has also decreased. Every year, there has been a decrease of 76.56 crore litres in diesel sales and 17.76 crore litres in petrol sales in the state. This was found by a study conducted by the previous government itself. With the increase in prices, private vehicles have reduced fuel consumption and switched to electric vehicles, which has led to a decrease in revenue. If the cess is withdrawn, prices will come down. The government estimates that tax revenue will also increase with a surge in fuel sales.

1. Due to the additional cess of Rs 3, goods vehicles coming from outside and vehicles going out are filling up with full tanks of fuel from across the border. Even KSRTC is filling up with fuel from neighbouring states.

2. In the state, the price of diesel in Thiruvananthapuram is Rs 104.31, and petrol is Rs 115.49. Petrol is cheaper in the border cities of Mysore by Rs 12.6, Mangalore by Rs 5.24, Coimbatore by Rs 7.26 and Nagercoil by Rs 6.81

3. Diesel is cheaper by Rs 10.62 in Mysore, Rs 4.21 in Mangalore, Rs 11.42 in Coimbatore and Rs 3.77 in Nagercoil