As economy is slump in revenue collections during the lockdown, states are going to increase taxes to make up some of the losses as the restrictions are eased.The Andhra Pradesh government hiked prices of liquor by another 50% on Tuesday, only a day after imposing a 25% hike (all 3,468 retail outlets are government owned). The fresh hike could fetch the state an additional revenue of Rs 9,000 crore a year.
Tax, tax: Petrol price in the national capital went up by Rs 1.67 a litre on Tuesday and diesel by a steep Rs 7.10 per litre after the Delhi government increased taxes on the two fuels. While the Value Added Tax (VAT) on petrol was increased to 30% from 27%, that on diesel was almost doubled to 30% from 16.75%. The expected gain: Rs 900 crore annually. The VAT hikes comes a day after the Delhi government imposed a 70% (of the maximum retail price) ‘Special Corona Fee’ on liquor.
The template: The central government too had raised excise duty on petrol and diesel by Rs 3 per litre each in March to raise an additional Rs 39,000 crore annually. This hike negated the benefit arising from international oil prices slumping to two-decade lows. States like Tamil Nadu, Haryana and Nagaland (it has imposed a Covid-19 cess) have also hiked taxes on fuel.
The options: State governments are considering hiking entertainment tax, municipal taxes and local panchayat cess, according to reports. Registration charges on cars and property are being talked about as options too.
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