Finance Minister T.M. Thomas Isaac has allayed fears that the Kerala flood cess to be introduced in the State for two years to mobilise resources for Rebuild Kerala Initiative will lead to inflation and trade diversion.
“The cess is not a permanent levy and it has been mooted for two years only. It will not push up the prices as feared by the Opposition nor lead to trade diversion,’’ Dr. Isaac said while replying to the motion in the Assembly on Friday for reference of the Kerala Finance Bill, 2019 to the Subject Committee.
Dr. Isaac said the cess of 1% is negligible. Trade diversion, if at all, will be marginal, he said citing the concerns of the treasury benches on consumers opting to purchase goods from neighbouring places such as Mahe where there is no cess.
Dr. Isaac said the Goods and Services Tax has taken away the rights of the State and the calamity cess has given the State a small manoeuvrability within the GST system.
He reminded the House that it is for the first time that the GST Council had allowed a State to impose a levy outside the GST tax slabs.
The Finance Minister said the government was taking steps to collect tax arrears and was looking for options given by the Income Tax Department of the Centre for the amnesty scheme as the Finance Bill does not have any remedy.
Financial crisis
Responding to the concerns on State’s financial crisis raised by the Opposition legislators who participated in the discussion, Dr. Isaac said he would return to the House on Monday with a detailed statement.
Traders are not filing GST returns and the government will collect penalty from them and notices are being served on the erring traders.
The State will press for 50% of the IGST from the Centre in advance with the support of the other States. A sum of ₹1,25,000 crore is with the Centre as IGST and they are using for ways and means, he said, seeking the support of the Opposition.
The Minister rejected the demand of the legislators to revise the norms for roads to get funding from the Kerala Infrastructure Investment Fund Board (KIIFB). “It cannot be changed as the projects funded by KIIFB should stand unique,” he said.
