Govt. banks on tax revenue from Ernakulam to remedy slowdown

Accounting for about half the sales tax revenue , tax collection from Ernakulam district sets the tone for the financial condition of the State. The slowdown in trade following the demonetisation of high-value currency notes in early November has brought the district’s potential to sharp focus with the Finance Department launching a campaign to increase tax collection as envisioned in the 2016-17 Budget.

The district will account for 48.3 per cent (Rs.18,681 crore) of the total tax revenue of Rs.38,628 crore for the financial year. According to a government press release, the collection in Ernakulam stands at Rs.8,434 crore up to October. Mattancherry circle has raised Rs.848 crore. The figures make up 89 per cent of the target. Self-assessment in the coming months should raise Rs.6,725 crore from Ernakulam and Rs.610 crore from Mattancherry, the press release added.

Intensive campaign

The intensive revenue raising campaign is being launched to increase the collection because of additional demand. The targeted revenue was Rs.1,850 crore for Ernakulam and Rs.213 crore for Mattancherry, the press release said. The Finance Department said intensive campaign to raise tax revenue was vital to the success of the government’s development agenda.

Government’s plan

While there is a perceived slowdown in the economic activities of the State, the way to overcome it is to increase capital spending. At the same time, the lion’s share of loans availed by the government goes into reducing revenue deficit. Now, the government has drawn up a plan to raise capital for infrastructure through institutions such as Kerala Infrastructure Investment Fund Board (KIIFB). To make it a success, the government has to control revenue deficit.

The press release said that revenue deficit had shot up over the past five years after it came down between 2001-02 and 2010-11. The key reason for the rising revenue deficit was the decrease in government revenue. While the commercial tax revenue increased on an average of 18 per cent till 2013-14, the growth slowed down to 11 per cent from that year. The tax receipts grew only nine per cent between April and October this financial year. This is on account of the economic slowdown.

Several studies have pointed out that there is a loss of 25 to 30 per cent in tax revenue for the State. In other words, tax collected from the people does not reach the State exchequer. The lack of efficiency in tax collection would be addressed through a slew of measures, including increasing efficiency and reducing corruption, the press release added.

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Printable version | Mar 6, 2021 2:34:39 AM | https://www.thehindu.com/news/cities/Kochi/Govt.-banks-on-tax-revenue-from-Ernakulam-to-remedy-slowdown/article16716163.ece

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