Kerala - Thiruvananthapuram   

No tax cut, says Isaac

THIRUVANANTHAPURAM: Finance Minister T. M. Thomas Isaac on Thursday ruled out any reduction of tax rates in Kerala in view of the global economic crisis.

The Minister was talking to the presspersons after pre-Budget discussions with representatives of organisations of traders and businessmen. The Budget is proposed to be presented in the second or third week of February.

Dr. Isaac said the traders and industrialist wanted the tax rates to be reduced in the Budget as the slump in the economy had brought down trade and availability of credit. However, cut in tax rates would mean reduction in governmental expenditure. The government wanted to increase expenditure as an antidote to slow down of the economy. However, the Central government was forcing the States to cut expenditure by not relaxing the borrowing limits.

He said a fall to the tune of Rs.700 crore was anticipated in the estimated revenue of Kerala from stamp duty this year. Only, the revenue from commercial taxes kept on increasing because of the measures taken by the government for better tax realisation.

The Minister said the government was planning investment in the development of tourism infrastructure and housing. The possibilities for attracting private investment were being examined. The panchayats would be allowed to borrow a total of Rs.2,000 crore with government guarantee for housing. Welfare programmes for traditional workers would be strengthened to help them during the crisis years.

Dr. Isaac said the government was hoping that the Centre would concede to the demand for higher borrowing limits next year. The Budget was being planned accordingly. If the Centre declined the demand, money for higher investments would be raised through treasury deposits.

He said the State would seek allocations from the 13th Finance Commissions to address special problems of the State such as sea erosion, conservation of biodiversity and upgradation of services. The debts of the States in areas such as national savings should be fully written off. The overall devolution of tax revenues to the States should be increased from 60 to 65 per cent. About 50 per cent of this should be provided to the States as untied funds.

He said the proprietary (Microsoft Excel) format was chosen for filing of e-returns by traders, which was inaugurated on Thursday, as that was the system inherited by his department. It could be changed in steps. The work on the impact Budget of different departments and gender audit would not be completed before the presentation of the Budget. The Plan expenditure this year would be higher than last year.

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