The COVID-19 cess on high speed diesel and motor spirit (petrol) came to effect on the midnight of April 28 Credit: Representational image

Kohima: Two days after COVID-19 cess on high speed diesel and motor spirits (petrol) was levied, the Nagaland finance department clarified that the taxes on petroleum products were necessitated at this time of the global pandemic due to the drastic fall of the government’s revenue.

A top official from the state said that COVID-19 cess is “categorically” targeted to ensure that the revenue generated from the taxes is utilized only for COVID-19 related activities and will be withdrawn “once the threat of the COVID-19 pandemic is formally declared to be over”.

Although no estimation for COVID-19 was made in the budget, the global pandemic has forced the state government to allocate more funds for the health infrastructure and other areas related to COVID-19, eventually leading to an increase in the levels of deficit, said additional chief secretary and finance commissioner Sentiyanger Imchen during a press briefing on Friday.

As pre-emptive steps taken in the form of certain austerity measures, the state government decided to cut down on its expenditure by freezing fresh appointments, freezing the dearness allowances (DA) and dearness relief (DR) for government employees and pensioners, in tune with the Central government.

Imchen revealed that it also affected 15% cut on non-plan expenditures on some items like office expenses, travel expenses, including ban on purchase of vehicles. Further, the finance department is also examining if there should be pro-rata cuts on plan expenditure.

Expected revenue generation from COVID-19 cess and longevity:

In an attempt to raise resources to combat the deadly virus, Imchen said that the state levied the cess on High Speed Diesel and Motor Spirit (Petrol), which came to effect on the midnight of April 28 at the rate of Rs 5 per litre for diesel and Rs 6 per litre for petrol and other motor spirits.

The COVID-19 cess is expected to generate additional revenue of Rs 55.58 crore annually. With an annual sale of diesel at Rs 6.10 crore approximately, the anticipated projection of revenue from diesel is Rs 30.5 crore. As for petrol, the annual sale at Rs 4.15 crore is projected to generate Rs 25 crore.

Petrol and diesel prices in comparison with Assam and Meghalaya

According to the department, the categorical mention of COVID-19 Cess meant that revenue generated from the taxes will be used only for COVID-19 related activities, not for any other development activities, and that the amount is auditable. The cess will be “withdrawn once the threat of the COVID-19 pandemic is formally declared to be over”.

The department also made a comparison with the neighboring states of Assam and Meghalaya, both of which levied cess on April 22. Imchen said that even after the cess is levied, the rate of petroleum in Nagaland is “much cheaper”.

Imchen also clarified that although the price of international crude oil has dropped over the past weeks, the benefit of the reduction has not been passed on to the consumers by the Central Government. “It has nothing to do with Nagaland,” he said.

However, when questioned about why the taxes for petroleum are levied for COVID-19 activities even when the state has no positive case, the officials responded saying that the cess is levied to utilise in the preparedness of battling the pandemic should any positive case be detected. The officials added that it is preparing for the worst as the pandemic could possibly cripple the society.

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