In an election year, while the United Progressive Alliance (UPA) government led by the Congress was forced to increase fuel prices, both the Congress and its key rival Bhartiya Janata Party (BJP) today asked their chief ministers to go for sales tax cuts to lessen the impact of the hike.

While the UPA and their allies-ruled states such as West Bengal, Tamil Nadu, Delhi and Maharashtra cut sales tax rates immediately, among the NDA its and allies-ruled states only Bihar has so far cut the sales tax. Sales tax on petroleum products is an important source of revenue for most states. Many states, besides the sales tax, also impose cess and entry tax. Congress chief Sonia Gandhi, according to sources, spoke to all party CMs on phone and told them to lower sales tax. BJP chief Rajnath Singh too asked the CMs of seven BJP-ruled states to provide some relief to the “aam aadmi”.

Congress-ruled Delhi announced a sales tax cut and subsidy on LPG, saying the Rs 50-hike in LPG rate would be reduced to a Rs 10 increase. It, however, did not cut sales tax on petrol and diesel which stands at 20 per cent and 12.5 per cent, respectively. The subsidy would cost the state Rs 165 crore a year.

DMK-ruled Tamil Nadu decided to reduce sales tax on diesel by 2 per cent, a move that would entail an annual revenue loss of Rs 260 crore. It also did not cut sales tax on petrol and LPG at 30 per cent and 4 per cent, respectively.

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