Fuel tax windfall: State coffers rise as consumers suffer

Jaipur: Household budgets across Rajasthan are facing a severe strain following another round of fuel price hike Saturday, which pushed retail rates in Jaipur to Rs 109.87 per litre for petrol and Rs 95.05 for diesel.

Driven by global crude volatility, this relentless streak follows steep revisions on May 15 and May 19. For the average citizen, the immediate impact is a painful blow, as the costs of daily commuting and essential commodities inevitably climb.

However, an analysis of the pricing structure reveals an unequal distribution of this pain. While the common man is forced to tighten their belt, the state govt is earning an automatic revenue windfall.

Unlike fixed rupee-per-litre duties, Rajasthan levies VAT of 29.04% on petrol and 17.30% on diesel. Consequently, whenever oil companies raise prices, the state’s absolute tax collection per litre automatically swells without needing a formal tax increase.

Data from the Rajasthan Petroleum Dealers Association (RPDA) highlights this rapid escalation. The tax revenue flowing into state coffers per litre (including VAT and Road Cess) surged from Rs 39.51 on April 1 to Rs 41.04 following the first two hikes, which will go up further when the gains from the current hike is factored in.

RPDA officials have urged chief minister Bhajan Lal Sharma to urgently cut VAT percentages, stating that the current system acts as an inflation multiplier, allowing the state to profit directly from consumer distress.