As we have seen in the last 7 years, our Modiji keeps increasing Central taxes on Fuel & it’s justified by saying
- States get 42% of the central taxes on Fuel, so all the increased revenue is not only going to Modiji but also to the states
- Poor Modiji has to pay back oil bonds taken by the UPA & hence he has to levy more taxes.
- Poor Modiji has to pay for vaccines, hence more taxes
Let’s take a look at these 3 claims. I am using Petrol mostly to do the calculations, but Diesel is also quite similar.
1. State’s share of Central Taxes on Fuel
Q: How much of Central Tax on Petrol goes to the States?
A: 1.7% of the Petrol Central Taxes goes to the States. 98.3% goes to the Union Govt. Diesel is 2.3% to States & 97.7% to the Union Govt.
Let’s start with how much Central Taxes on Petrol was in 2014 & how much it is in 2021
Central Taxes per litre of Petrol
20142021Central TaxesRs. 9.48
So Central Taxes on petrol is nearly 345% of what it was before Modiji. It’s increased by 245%.
But 42% of the taxes go to the States. So Union Govt gets only 48% of the taxes!!! — FALSE
It’s true that 42% of the Basic Excise Duty is shared with states but the Rs 32.9 is not the Basic Excise Duty but it’s the total Central Taxes.
There are 3 components to Central taxes on Fuel
- Basic Excise Duty
- Special Additional Excise Duty (SAED)
Now, these components are split into the Divisible Pool & the Non-Divisible Pool.
Only Basic Excise Duty falls in the Divisible Pool while SAED & Cess fall in the Non-Divisible Pool. Only the amount which falls in the Divisible pool is shared with the states. The Non-Divisible Pool goes totally to the Union Govt.
Now let’s see the breakup of Central taxes currently.
Only the bolded part is shared with the States
42% of the Rs. 1.4 (& not the whole 32.9) is shared with the states. i.e. only 59 paise of the Rs. 32.90 goes to States. Rs. 32.31 remains with Modi.
Comparing Tax components between 2014 & 2021
So if you see
- The divisible pool (shared with states) of tax on Petrol has increased by 20 paise
- The non-divisible pool (not shared with states) has increased by Rs. 26.12
So almost all the increases in Central Fuel Tax is kept by the Union Govt. The increase in the divisible pool in 7 years is 16%. The 200+% increase in the taxes have come in the non-divisible pool which isn’t shared with the states.
States also levy their own separate taxes on Fuel (VAT/Sales Tax), but the above is about the Central Taxes which IT cell justifies by saying is shared with the states. Yes, it is shared. But only 1.7% of it goes to States. 98.3% is kept by Union Govt.
So, Myth#1 busted
2. Poor Modiji had to increase taxes to pay for the Oil Bonds issued by UPA
First of all Oil Bonds were not only issued by the UPA, Oil Bonds were also issued by Vajpayee which the UPA paid.
Other than let’s look at the claim itself.
- The center pays somewhere between 10,000 to 20,000 crores per year for the Oil Bonds.
- In 2014–15, the center got 1 Lakh crore on Excise Duty (Can’t find figure for the last UPA year, was probably lower than that).
- In 2020–21, the center’s share of the Excise duty was 3.71 Lakh crores. So they got a minimum 2.71 Lakh crores extra on Excise Duty in 2021 itself this year.
- Over the 7 years, the Union Govt’s share of the extra Excise Duty was 8.65 Lakh crores. i.e. Modiji made 8.65 lakh crores in Additional taxes on Fuel. Assume they paid 1.05 crores in 7 years for oil bonds. Even covering for that, the extra taxes (because of the tax hikes) going to the Union Govt over 7 years was 7.60 Lakh crores.
So there goes the myth that Modiji increased taxes to pay for Oil Bonds. The Tax Guzzling Union Govt actually increased taxes by 8 times what was actually needs to cover the oil bonds. i.e. out of every 8 rupees of increased taxes, only 1 Rupee was needed to cover the Oil Bonds. The other 7 Rs went to the Big Central Government.
So, Myth #2 Busted
3. Poor Modiji doing this to pay for vaccines.
For one, Tax increases on Fuel didn’t start in 2020. They started in 2014 itself. Modiji has been increasing taxes on Fuel from 2014 on. Even when World Oil Prices were at 30$ a barrel, we were still not getting the benefit because each time Oil Prices dropped, Modiji increased Taxes on Fuel. Excise Duty in 2015–16 itself was twice was it was in 2014–15. He has been looting us for 7 years. In these 7 years. the Union Govt has made an additional 8.65 lakh crores of additional revenues over what they would have made without Modiji’s tax increases.
The vaccine cost is probably going to be around 30,000 crores (even lesser probably considering how 25% of the vaccines are done by private providers).
So 8.65 lakh crores of tax increases in 7 years to pay for 30,000 crores of vaccines. Just in 2020–21, itself Fuel tax increase was 1.5 lakh crores over 2019–20. I don’t even have the guts to compare it with 2013–14.
And of course, there is PM Doesn’t Care fund. In the first 5 days, the fund got 3000 crores in donations. No idea how much is their current corpus, but I am sure it would be a good amount.
So, Myth #3 Busted
Excise is not the only revenue made on Petroleum products. There is a lot more
Excise Duty is not the only revenue Modiji makes from Petroleum Products. He makes a lot of other revenue.
Even before the crude oil is sent to the refineries, Modiji makes money on it.
- In 2014, when Modiji took over, we had 38 paise cess per litre of domestically produced Crude Oil. Now it’s Rs. 66 paise per litre of domestically produced Crude Oil. So roughly another extra 66 paise per litre of Petrol goes to Modiji (Other than the Excise Duty).
- In 2014, when Modiji took over, we had Zero Custom Duty on Imported Crude Oil. In 2021, there is 2.5% Customs Duty on Imported Crude Oil. That works out 66 paise per litre of Imported Crude Oil.
But wait, this is still not all the revenue which the Union Govt gets from Petroleum Products. Other than this, they also get more (none of which is shared with the states) (Projected figures for 2020–21)
All the stuff
- Customs Duty Rs. 13,512 crores
- Royalty on Crude Oil/Natural Gas — 3,590 crores
- National Calamity Contingent Duty (NCCD) — 1,016 crores
- GST (though there is no GST on petrol/diesel, there is still GST on other taxes — like GST is levied on customs duty & other things ) — 17,752 crores
- Other taxes on Petroleum related stuff — 365 crores
- Corporate Taxes on Petroleum Companies — 21,909 crores
- Dividend from Petroleum PSUs to Modiji — 10,393 crores
- Profit from Petroleum Exploration — 35,174 crores.
Adding everything, the Center got Rs 4.54 Lakh crores from Petroleum related income in 2020–21.
OTOH, all states put together just made 2.18 Lakh crores from Petroleum related income in 2020–21 (Other than the VAT/Sales tax, just like the Union Govt, states also have other income from Petroleum related products like Royalty, Dividend Income etc).
So if we consider all the income made from Petroleum products, the states got 32% of it & the Union Govt got 68% of it.
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