West Bengal Finance Minister Amit Mitra on Sunday announced a reduction of tax by Rs 1 per litre on petrol and diesel, effective from midnight.

West Bengal government’s move comes a day after Union Finance Minister Nirmala Sitharaman said that Centre and State governments will have to work together to bring retail rates to reasonable levels.

Amid the hike in the price of petrol and diesel, the Mamata Banerjee-led government alleged that the Centre is robbing the state from their own resources.

“As 42 per cent tax devolution for states is decided under the consolidated funds of India, the Centre is smartly acquiring major portion as cess instead of tax,” West Bengal Finance Minister Amit Mitra stated.

“On February 20, the price of petrol in Kolkata stood at Rs 91.77 per litre out which the Centre took Rs 32.90 as tax and cess while the State got Rs 18.46 only. In case of diesel, the centre took Rs 31.80 as against Rs 12.77 for the state while the price stood at Rs 84.55 per litre," he added.

Out of the Rs 32.90 that Centre levies on petrol, Rs 20.50 is only cess, which is 62 per cent. On diesel, Centre takes Rs 22 as cess out of Rs 31.80 which is 69 per cent. "As we all know cess is not given back to the States and the Centre is deducting major amount as cess,” Mitra said.

Blaming the Central Government for its inability to control the skyrocketing fuel prices, Mitra said the Union government should reintroduce the planning commission.

"When Modi government came to power, total aggregated cess was 8 per cent of gross tax collected and now it has increased to 14.5 per cent," Mitra pointed out.

He also alleged that the Centre had imposed cess to avoid devolution with states, which is "against the characteristics of federalism".

Ahead of Assembly elections in Bengal, Mitra challenged Union Home Minister Amit Shah for a virtual debate on the increase of cess on fuel prices.

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