Resource mobilisation drive abandoned

Saturday, 27/10/2012

http://www.tribuneindia.com/2012/20121027/punjab.htm#1

Chandigarh : The Punjab Government has abandoned its resource mobilisation drive after introducing taxes which will bring in Rs 1,000 crore annually (Rs 400 crore this year). It is now banking on “natural buoyancy” of economy to see itself out of the red next year.

In his Budget speech this year, Finance Minister PS Dhindsa had announced that the government would go in for resource mobilisation after the civic elections in August.

However, the drive has been put off owing to pressure from the BJP and the public, with less than half of the proposals implemented.

Proposals, including property tax, stamp duty and 200 per cent hike in luxury tax on hotels and marriage palaces and 6 per cent road tax have been cleared. However, property tax is yet to be introduced despite the fact that doing so will qualify the state for Central funds.

Proposals to levy 5 per cent VAT (value-added tax) on sugar and a 5 per cent tax on cotton fabric have been dropped and so has the proposal on professional tax following objections Dhindsa, when questioned on the issue, said instead of imposing new taxes, the government hoped to meet its target by relying on “natural buoyancy of economy”.

Dhindsa admitted that the government was partly unable to meet its Plan expenditure during the last three months, with the state concentrating on committed expenditure such as repayment of loans, salaries and subsidies.

He said the situation would improve from next month with the government set to collect Rs 1,200 crore in taxes for procuring paddy and additional revenue in the form of taxes in the festive season. Dhindsa said the situation was likely to stabilise by April next year with improvement in the manufacturing sector and foreign trade. The minister said there had been a robust increase in VAT collection by 17 per cent.

Sources said the government was banking on collection of enhanced revenue (Rs 1,000 crore) next year because of the resource mobilisation steps taken this year.

Proposals Dropped
Proposals on levying 5% VAT on sugar, 5% tax on cotton fabric and professional tax

Property tax yet to be introduced

Proposals Cleared
Property tax, stamp duty and hike in luxury tax on hotels and marriage palaces, 6% road tax

MinisterSpeak
The situation is likely to stabilise by April next year with improvement in the manufacturing sector and foreign trade. Already, there has been a robust 17% rise in VAT collections