THIRUVANANTHAPURAM: Finance minister Dr T.M. Thomas Isaac, who had in his White Paper argued that corruption alone had caused tax growth to stagnate during the UDF tenure, said that a slew of other factors beyond the state’s control like crisis in the rubber sector, fall in crude oil prices, and a general slump in the national economy had affected tax growth during the last five years. While presenting his White Paper on June 30, he had ruled out the argument that fall in tax revenue reflected the general slump in the economy.
“The fall in VAT revenues had taken place at a time when remittances had swelled and VAT rates were substantially incr-eased,” Dr Isaac had said. However, in the Assembly on Tuesday, Dr Isaac listed out other reasons for the tax crisis. “The fall in price of rubber has adversely affected the purchasing power of the people. This has been reflected in the tax collection, too,” Dr Isaac said. He added that figures till March 31 show that revenues from rubber had fallen by 9 per cent. Further, he said that rubber had to be exempted from tax from December 2014 to March 2015.
The fall in motor vehicle tax, which is the consequence of the lingering recessionary trends in the national economy, is the other big reason cited by Dr Isaac. Motor vehicle tax constitutes 18 per cent of the state's VAT revenues. “Motor vehicle tax that recorded a growth of 24 per cent in earlier years fell to just 7 per cent during 2014-15 fiscal,” the finance minister said.
Revenue from oil companies, too, showed a considerable decline. “Normally, revenues from oil demonstrated a growth of 20 per cent. But last fiscal, it was only 9 per cent,” Dr Isaac said. This is mainly because of the fall in the prices of petrol, diesel, and a drop in the sales of bitumen and furnace oil. The closure of bar hotels has also led to a fall in revenues, Dr Isaac said.
