New Delhi: Common man may be burdened with another price rise of petroleum products. This time there is no pressure on state governments to slash taxes on petroleum products. Huge VAT rate cut by Goa state government a day back may continue to be only exception in the nation. The Finance Ministry is not in favour of VAT rate cut by state governments because it will affect their revenue collection figures.

The Finance Minister has already indicated that due to the weak financial positions of states it would be difficult for state governments to cut VAT rate on petroleum products. Due to shortfall in estimated tax collection and National Small Savings Fund, there will be fewer grants for states from the Centre.

In last one year, crude oil price have surged from USD 95 per barrel to USD 125 per barrel. In such a scenario, only Goa government has empathized common man with heavy cut in VAT rates on petroleum products. From June 2011 to December 2011, retail petrol prices have been hiked seven times by oil companies. Whenever retail prices are hiked, state governments are benefitted with more tax collections. Despite, state governments have not chosen to give relief to common man. State governments are collecting 20-33 percent tax on petroleum products. VAT rate on diesel prices are between 9.68 percent to 25 percent.

Today, taking a tough stand, the Petroleum Ministry has told the Centre that if oil companies are not compensated for the losses, the decision on heavy price rise can be taken. The Petroleum Ministry has demanded additional Rs 40,000 crore from the Centre which has already given Rs 45,000 crore. Amidst all this, VAT rate cut by state governments may act as blessing in disguise for the common man.