M A I N   N E W S

Punjab to raise more resources
Sukhbir-Kalia team proposes fresh taxes, hike in VAT, bus fares
Prabhjot Singh
Tribune News Service

Chandigarh, January 19
The much-awaited two-member committee report on suggesting ways for additional resource mobilisation for Punjab, which is reeling under severe fund crunch, has finally been made public. The report gives a new nomenclature to farm subsidies besides suggesting reviving abiana and recommending upward revision of VAT, bus fares and collectorate rates.

It also recommends introduction of new taxes on property, institutions, DTH service, electricity duty on power generation for captive consumption and surcharge on VAT as immediate measures to generate additional Rs 4,000 crore per annum.

In a clever exercise of mopping up resources months before the state Budget, Deputy Chief Minister Sukhbir Singh Badal and Industries and Local Bodies Minister Manoranjan Kalia have orchestrated a report that not only sings a coherent alliance tune but also attempts to make much-needed corrective measures to battle fiscal discrepancies.

Interestingly, this will silence the BJP outcry against rural subsidies. All other subsidies, including atta-dal, shagun, old-age pension and welfare schemes for women Dalits and economically weaker sections, will continue.

The recommendations, subject to acceptance and endorsement by the Council of Ministers, would also set in motion the flow of funds, grants and matching contributions both from the Centre and financial institutions like the World Bank that were earlier held up for want of fiscal reforms in various subsidies offered to different sections of society.

The subsidies which remain unchanged have been given a new nomenclature. Also, the suggestions take a huge burden off the cash-strapped Punjab State Electricity Board. However, it directly puts additional pressure on the state government, which will have to compensate farmers with productivity bonus equivalent to power bills paid by them.

Realising that new taxes and restructuring of the existing VAT system need to be compensated by citizens’ welfare measures, the report has suggested several new measures, including raising retirement age to 60 years from 58, exemption from payment of any stamp duty on transfer of commercial or industrial property to legal heirs, reducing duty on sale deeds in favour of women by 1 per cent to 3 per cent, delaying implementation of revised power tariff till April 1 this year and also reducing the tax on private vehicles being used for transportation of people.

The committee also promises to improve quality of life in both urban and rural areas, as it also promises to review the External Development Charges (EDC) and the Change of Land Use (CLU) charges.

The 12-page report says the state needed to reinvent itself to accelerate pro-people development. It observed that revenue expenditure had fallen from 69 per cent to 40 per cent. The main guiding principles, the report says, are not to withdraw subsidies. “Subsidies like free power and water need to be rationalised than withdrawn. Innovation lies in taxing the profit and not income,” says the report to justify the levying of user charges. For example, all those who use DTH services will pay Rs 10 per month per connection. Cell towers will require one-time regularisation fee of Rs 1 lakh and annual payment of Rs 15,000 to Rs 25,000 depending upon the size of the city and its location.

Progressive taxation, too, has been put in place. Property tax and institution tax are also proposed. However, schools and residential buildings outside municipal limits will be exempted from institution tax. The building plans have also been given an extended life of five years for the construction and completion of buildings. Abiana is back. For an acre of land, farmers will have to pay Rs 150 per annum. This, the report says, will go towards augmenting the irrigation network, including new canals, relining and cleaning the existing ones.

Productivity bonus is replacing the power subsidy. Against the previous tariff of Rs 60 BHP, the committee has recommended Rs 50 BHP to be collected on biannual basis for power supply to farm sector. The actual power would be reimbursed as productivity bonus in recognition of farmers’ contribution to the national foodgrains pool.

Bus travel will become costlier with fares going up by 7 paise a km. The committee proposes to make the state roads more vehicles friendly.

Pain in offing

l VAT to be up from 4 to 5 pc, 10 pc surcharge on VAT items (except foodgrains, iron, steel)

l Property tax on unit area basis

l Abiana @ Rs 150 per acre/annum

l Bus fare to go up from 49 paise/km to 56 paise/km

l Entry tax on lubricants, furnace oil and generator sets

l DTH service tax @ 10 per cent per connection per month

l Institutional Tax @ Re 1/sq ft per annum for the covered area of the an institution out of municipal limits

l Electricity charge @ Rs 50 per BHP to be collected biannually. 

Gains on anvil

l Retirement age to be raised to 60

l Exemption on payment of stamp duty on commercial/industrial property on transfer to legal heirs

l Sale deeds in favour of women to registered at 3 pc

l Revised power tariff from the date of notification and not retro spectively

l Octroi on energy duty to go from April 1

l Building plans valid for 5 yrs from sanction date



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