Why The Fuel Taxes are a Bone of Disagreement

High retail prices of petrol and diesel have become a burden on consumers and a drag on economic recovery but it helps the central and state governments balance their budgets

High retail prices of petrol and diesel have become a burden on consumers and a drag on economic recovery but it helps the central and state governments balance their budgets. Mint takes a look at what is behind the tussle over fuel taxes

Why are fuel taxes a bone of contention?

A steady rise since November in global prices of petrol and diesel, to which local retail prices of these fuels are linked, together with high taxes, have pushed up inflation in the country. State-run oil retailers who held prices steady between early November and the fourth week of March, have since increased retail prices. The Central and state governments are dependent on fuel for a big chunk of their revenues, making energy prices a controversial issue. Prime Minister Narendra Modi’s appeal to some states on Wednesday to lower value added tax (VAT) received sharp reactions from states such as West Bengal and Maharashtra.

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