Thiruvananthapuram: Kerala Assembly witnessed sharp exchanges over rising fuel prices and state taxation policies linked to global conflict-driven oil price increases. Leaders from the ruling and opposition blocs traded charges on revenue gains and tax relief measures.
Former Chief Minister Pinarayi Vijayan and former Finance Minister K N Balagopal questioned Chief Minister V D Satheesan over the state’s fuel tax strategy. They raised concerns on whether the government would reduce sales tax following higher fuel prices or continue to collect additional revenue.
Balagopal stated that fuel price rises could generate ₹150 to ₹180 crore in extra monthly revenue for the state. He moved an adjournment motion to discuss economic pressure caused by increased petrol and LPG costs linked to Middle East tensions.
Chief Minister Satheesan defended the existing tax structure. He said the state requires funds to manage inflation and clear pending liabilities, including dues owed to the Civil Supplies Corporation. He stated that past governments had also benefited from higher fuel prices without reducing tax rates.
Fuel taxation in Kerala includes a 30.08 percent sales tax on petrol along with additional levies such as ₹1 per litre surcharge, a one percent cess, and a ₹2 social security cess. Diesel carries a 22.76 percent sales tax along with similar additional charges.
The Chief Minister indicated a possible review of the ₹2 per litre social security cess introduced in 2022. He referred to earlier warnings about its economic impact, including reduced diesel consumption after its introduction.
Opposition leaders highlighted earlier reductions in fuel tax under previous administrations. They argued that current revenue gains mirror past patterns under different governments.
The Chief Minister noted that between 2016 and January 2026, the state collected around ₹3,100 crore in additional revenue from fuel price increases.
