Petrol price hike unjustified : Finance panel Member tells PM

New Delhi, June 11 (UNI) Strongly opposing increase in petrol and diesel prices, Member of the Parliamentary Committee on Finance and PAC C Ramchandraiah has urged Prime Minister Manmohan Singh to reduce excise duty on these items instead of asking state governments to cut down sales tax.

Disputing that rising international crude prices were mainly responsible for the increase in prices of petroleum, Mr Chandraiah said fiscal measures, partcicularly high tax component were equally to be blamed.

In a letter to the Prime Minister released to the press today, he pointed out that there were a multitude of excise duties on petrol and diesel which could be scrapped or brought down.

Excise duty comprised about 36 per cent of retail price of petrol and 17 per cent of the retail diesel price, which means that about Rs 17 out of Rs 48 in the petrol price and about Rs 6.50 out of diesel price comes from excise duties, he said.

And total taxes come to more than 50 per cent of what is paid as total retail price of petrol and diesel.

''This is disturbing trend. May I, therefore, suggest that excise duties on petroleum products be so structured as to ensure that the interest of the consumer were not compromised,'' said the MP.

He suggested that the ad valorem component in the existing mix should be replaced by a single specific component to ensure that the tax burden on consumer did not go up each time the price of petrol and diesel went up.

In his view, a steep price hike will have a disturbing trend on the general price line, which will hit the commonman further. The rise could have been averted if the government had implemented a duty neutralisation regime.

He said asking states to cut down sales tax was not just as they levy only this tax on petroleum while the Centre levied a number of excise duties.

Mr Chandraiah also advised him to convene a meeting of chief ministers to discuss the issue.

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