Revenue losses due to the reduction of petrol prices would be offset through already-existing higher taxes on liquor, motor vehicles and other luxury imports, State Finance Minister Ranjith Siyambalapitiya said on Friday
This week the value-added tax on petrol was reduced making way for the slashing of the price of petrol by 11.5% with effect from Tuesday midnight accordingly, with the new price of a litre of petrol being Rs.115 while diesel remains at Rs. 73 a litre.
Mr. Siyambalapitiya said that higher rates on liquor have raised more than Rs.3.2 billion in 2009 and increased excise duty on consumer durables and vehicle imports has swelled the coffers by over Rs. 3 billion additionally, he said.
However Opposition Parliamentarian Wijedasa Rajapakse said the Government which failed to respect the Supreme Court order of reducing fuel prices after agreeing to do it, has slashed the prices seven months after ending the war in the north and on the eve of Presidential elections.
“This is a bribe given to the masses to get their votes,” he said. He added that the Government was imposing a tax of Rs.60 on a litre of petrol but there was no proposal presented in Parliament to reduce these taxes. He pointed out that the Government had made it clear that it had allowed the Ceylon Petroleum Corporation (CPC) to enjoy high profits and it has failed to divulge the losses that will be incurred due to the price reduction.
Mr. Rajapakse said the Government maintained high petrol prices to increase State revenue since September 2008, despite world oil prices falling sharply to around $40 after hitting a record high of over $147 a barrel in mid-2008. Prices have risen from around $50 per barrel in May 2009 to over $70 last month.