Home Economy States unwilling to cut air fuel taxes

States unwilling to cut air fuel taxes

By Sanjay Singh, IANS

New Delhi : Ambiguity over who – the centre or the states – will take the call to cut air fuel taxes seems to have largely defeated the whole purpose of organising the first ever National Civil Aviation Conference in the capital.

While none of the state governments is willing to reduce taxes on air fuel, the central government too is not in favour of granting tax exemption by listing it as declared goods, under which the central sales tax would come down.

The states feel that if they agree on reducing the sales tax on air fuel to four percent – as demanded by union Civil Aviation Minister Praful Patel – they would lose badly on the revenue front.

According to Uttar Pradesh Chief Secretary P.K Mishra, if his state cuts air fuel tax from 20 percent to four percent, it would lose about Rs.7.50 billion every year.

“The central government only will have to offer concessions and bring air fuel as a declared item. How can states think of pruning their revenue,” Mishra, the senior most bureaucrat of the state, told IANS.

Patel indicated at the conference in the capital Friday that the central government cannot be taken for granted by states.

“State governments must not look at the aviation sector as a milking cow. Air operators are running at losses because of competition and high taxes,” the minister told members of the state delegations.

Sanjay Ubale, secretary (aviation department) of Maharashtra, the home state of the civil aviation minister, told IANS that the central government can at any point of time do away with exorbitant air fuel taxes by giving it the status of declared goods.

In India, the fuel cost makes up about 30 percent of the airline operating cost, in contrast to 10-15 percent in many developed countries.

As of now, the average price of aviation turbine fuel (ATF) for domestic airlines is Rs.19,811 per kilolitre as against an international average of Rs.10,192 per kilolitre. One of the factors contributing to the higher price of ATF is the high sales tax levied by state governments.

The minister has asked states, namely, Andhra Pradesh, Kerala, Maharashtra, West Bengal, Delhi, Tamil Nadu and Goa to cut down air fuel taxes. These states charge taxes on air fuel up to 35 percent. However, the states haven’t given any positive response to the government so far.