Vilasrao cabinet meets on S-T today

MUMBAI: Caught between alliance politics and economic pressure the Vilasrao Deshmukh cabinet will meet on Wednesday to decide on sales tax cuts on petrol and diesel.

The Deshmukh government has been in a fix after petroleum minister Murli Deora suggested sales tax cuts in Maharashtra even before it could decide on the issue. Since then efforts have been on to find a way out as the NCP, which holds the finance ministry, is unhappy at the prospects of losing revenues if sales tax is cut substantially.

The Congress, due to political reasons, on the other hand wants to bring down the sales tax since the Maharashtra is among the highest taxed state in the country. In the state, petrol is taxed at 30-34% plus Re 1 per litre while diesel attracted a sales tax of 37% plus Re 1 per litre.

This makes the petrol cost around Rs 53.50 a litre in Mumbai compared to Rs 47.51 in Delhi and Rs 51.07 in Kolkata. Mr Deora wants the states to share some of the burden of the recent Rs four and Rs two hikes in prices of petrol and diesel, by not charging or partially charging sales tax on the hiked amount.

Meanwhile, the Maharashtra Rajya Truck Tempo Tanker Bus Vahatuk Mahasangh, the apex body of transporters in the state, on Tuesday organised demonstrations across the state, demanding that the government should take a concrete decision to reduce the sales tax on petroleum products as announced by the union petroleum minister recently.

The organisation has threatened a state-wide bandh if the government did not take a decision on this issue soon, Mahasangh president Prakash Gawli told mediapersons in Mumbai. “We are waiting for the cabinet to take a decision on reduction of sales tax on petrol and diesel which would lower fuel prices”, he said, adding that the Mahasangh would give a call for a state-wide bandh if its demand is not met.

Mr Gawli’s announcements come in wake of reports of differences between the two major partners in the Democratic Front alliance in Maharashtra on the issue. As has been reported the NCP is opposing the proposed reduction of sales tax on fuel, saying it would bring down the state’s revenue considerably.