Reforming fuel taxes

Combination of GST and carbon tax can help

Addressing the chief ministers of the states last week, Prime Minister Narendra Modi said that the Union government had reduced excise duty on fuel last November, but pointed out that some states had not followed this lead. He singled out several non-Bharatiya Janata Party (BJP)-ruled states in particular, and urged them to reduce the value added tax (VAT) that they levy on fuel. The prime minister’s exhortation did not go down well with the states in question, who raised several objections to his statement. They pointed out that the Union government has earned windfall gains on fuel production and taxation