Thiruvananthapuram: Faced with the challenging task of mobilizing additional revenue, the State Budget (revised) is almost certain to propose an increase in taxes.
Finance Minister K N Balagopal will be presenting his maiden Budget for the financial year 2021-22 in the State Assembly on Friday.
The State has the power to alter the tax on fuel, liquor, motor vehicles, buildings and land, and it is likely to impose an additional COVID-19 cess on liquor to help tide over the economic crises. The government, in May 2020, had imposed COVID-19 cess on liquor.
With the lockdown shutting down liquor outlets and bars, Kerala has been losing Rs 1,000 crore a month from the sale of alcoholic beverages.
Deviating from the trend of announcing 10 per cent increase in the fair price of property in every Budget, Balagopal’s predecessor T M Thomas Isaac, in his Budget tabled on January 15, had skipped the hike in the light of the Assembly polls.
The new Finance Minister is likely to announce a 10 per cent hike in property tax, making land registration more expensive. The government has been following a policy of increasing the fair price of land annually to make it on a par with the market price.
The Budget may also propose an increase in fees for services from all government institutions, including schools and hospitals. The hike may be in the range of five to 15 per cent.
Balagopal may include Rs 19,890 crore Central allocation to the State as additional revenue in the Budget. The grant was for tiding over the fiscal deficit. Isaac had not included the allocation in his Budget.
The Finance Minister is also certain to earmark an allocation for providing free anti-COVID-19 vaccine. With the second Pinarayi Vijayan-led government following the policies and development outlook of the previous government, Balagopal’s will be the continuation of Isaac’s Budget.
The Budget speech will begin at 9am, and will mostly last 1.5 hours. Isaac’s speech lasted three hours and 45 minutes in January.
Balagopal is likely to announce a comprehensive package to prevent sea-erosion, and special arrangements to equip teachers to handle digital classes. With an eye on the Assembly polls, the previous Budget had not proposed any measures to generate additional revenue.
The government is expecting a major dip in revenue following the second COVID-19 wave and the consequent lockdown. The major challenge before the government is to increase the revenue and to strictly implement austerity measures.
Minister demands extension of GST compensation period
Despite constraints, the Budget will include proposals to generate more revenue and to cut down expenditure, Finance Minister K N Balagopal has said.
The proposals will be made taking the COVID-19 situation into consideration, Balagopal said, adding that free vaccines will be ensured.
The move allowing a single-time option to clear VAT dues did not yield the desired result, the minister said, adding that only a small amount was collected. Balagopal said he will discuss the issue with the officials of the Department of Taxes.
The minister blamed the implementation of the Goods and Services Tax (GST) for the present financial crisis. The GST regime denied the States their right to decide on taxes. Balagopal demanded a five years’ additional extension of the GST compensation period.