Less reasons for more taxes
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The state government’s attempts to constantly increase revenue through additional taxation might be unjustified as the targeted growth in revenue for 2012-2013 is less than the previous year’s growth achieved at lower tax rates, say some senior revenue officials. It is pointed out that amid signs of a bad economy, the finance department has already decided to peg the revenue expenditure a shade below the revenue growth figure for the past year.
Officials say the revenue trends after the Congress took over the reins showed that the state’s resources registered a healthy growth of 23 per cent on an average, except in 2009-2010 when there was a negative growth of 0.15 per cent due, it is said, to the “global recession.” However, even during this period, there were no tax hikes. The present government has already increased VAT, and has targeted a 21 per cent growth for 2012-2013, which is less than the actual growth achieved in the past in the absence of additional taxes.
In the current annual budget, the government projected the state’s revenues at Rs 79,873 crore, including Rs 45,000 crore from VAT and Rs 10,820 crore from excise. In addition, the government is estimated to get Rs 36,914 crore from the Central pool of taxes. Sources told this newspaper that at a recent meeting, Chief Minister N. Kiran Kumar Reddy directed officials to look for possible areas of additional resource mobilisation.
Accordingly, chances of effecting increases in liquor prices, basic market values of properties, tax on commercial gas cylinders and motor vehicles and user charges for different services are being explored.
“We have been cautioning the government against increasing rates,” a senior revenue official said, adding that the hike in VAT had proved counter-productive due to non-compliance by traders. For instance, the VAT revenue grew by 23.28 per cent in 2010-2011 over the previous financial year.
Subsequently, the Kiran Kumar Reddy government increased VAT by a whopping 20 per cent and yet, the revenue in 2011-2012 improved by only 0.2 per cent, the official said. The overall state revenue growth dipped to 17.4 per cent in the same year but the revenue expenditure shot up by 22 per cent, showing signs of a bad economy. Worried at this trend, finance officials decided to peg revenue expenditure growth at 16 per cent for 2012-2013.
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