THIRUVANANTHAPURAM: Finance minister Dr Thomas Isaac is banking on innovation and plain common sense to improve tax revenues of the state. Isaac wants to raise tax growth to 22 percent from the 12 percent to which it has dropped in the last two years. The highlight is an incentive scheme for customers to demand bills from traders. Modelled on Kejiriwal’s ‘Bill Banvao Inam Pao’ (Demand a Bill, Grab a Prize), it is an app-based version of the LuckyVat scheme introduced by Isaac in 2006 inspired by a similar scheme in Mexico. Under this, the consumer can upload the bill on the Tax Department’s website or they can take a snapshot of the bill and send on the designated number of the Department through WhatsApp. The computer itself will pick the winners.
Rooting out corruption will be the game-changer. Corrupt officials will be weeded out, some will be given exemplary punishment, and good officers will be posted in sensitive areas. Computerisation is the other big step. “It was in 2008 that Commercial Taxes Department started the e-filing of tax returns. It is the very same server that we have now. The software that we had developed now has not been subjected to any change,” Isaac said. Even the CAG had commented that tweaking the server could easily improve the state’s tax revenue.
Poor scrutiny is the other reason why revenues are falling. “Today, only half the returns are scrutinised. That too, only a technical scrutiny is done,” Isaac said. “But from now on, each return will be intensely scrutinised. Each of the 94 items in a return, and their cross-linkages, will be closely scrutinised,” Isaac said. There are also plans to net traders who are out of the tax system. As of now, there are nearly 1.80 lakh registered dealers in the state. However, the data collected by the Department of Economics and Statistics shows that there are 13.24 lakh units in the non-agricultural field existing outside the scope of VAT.
Rs 5,000 anti-recession package for infra works
Finance minister Dr. T. M. Thomas Isaac has earmarked Rs 5,000 crore this year as part of the stimulus package to construct roads, bridges and buildings. The minister also mandated that the construction would be undertaken under maintenance care. Stating that the state was passing through a severe financial crisis due to various factors, the budget proposed an ‘anti-slowdown package’ of Rs 12,000 crore for taking up various development and infrastructure projects like roads, bridges and IT parks. “We will insist on following the norms strictly,” Dr Isaac said.
Apart from the national highways, state roads and district roads have to be widened and maintained as per the technical standards of bituminous macadam (BM) and bituminous concrete (BC). Dr. Isaac has earmarked Rs 1,206 crore for roads and bridges. He has already stated that Rs 1,535.46 crore is due to Kerala Government Contractors Association, pending from the period of the previous UDF Government's tenure. The finance minister is expected to allocate more funds towards PWD as the situation is very bleak.
“We would require Rs 4500 crore for meeting the construction cost of the existing roads and bridges,” Dr Isaac said. Rs 523 crore has been earmarked for the World Bank's Kerala State Transport Project of 363 km as the Central funding for KSTP is only '84 crore. The highlight of the package for PWD is the Rs 5,000 crore earmarked for the stimulus package where it would be utilised for bridges, flyovers/underpass, bypasses, roads and railway over bridges.
In this fiscal year, the department is expected to utilise Rs 500 crore from the stimulus package. It is expected that 68 bridges will be built with Rs 1,475 crore, 17 bypasses with '385 crore and 137 new roads with Rs 2,000 crore. PWD officials are now looking forward to the promise of allocating funds.
KIIF-B rules to be amended to ensure funds
Finance minister Thomas Isaac said that Kerala Infrastructure Investment Fund Board (KIIF-B) Rules would be comprehensively amended to allow the Board to mobilise funds using instruments approved by RBI and Securities and Exchange Board of India (SEBI), and also to accept the government guarantee in the form of motor vehicles tax. KIIF-B is a special purpose vehicle formed under the Finance Department way back in 1999 to raise funds for critical and large infrastructure projects in the state.
“The amendment to the rules will improve the credit-worthiness of the Board,” Isaac said. The amended rules will envisage the creation of Funds Trustee Advisory Commission (FTAC). FTAC will have as its chairperson internationally renowned names in the field of finance or banking. FTAC will ensure that the funds mobilised are not diverted for any other purpose except for the ones approved by the Board. He Commission will also issue a ‘fidelity certificate’ every six months attesting to the proper use of funds
KIIF-B Act will also be amended to guarantee a steady stream of income as viability gap funding. The idea is to route a share of motor vehicles tax as government guarantee to the Board. In the first year, 10 percent of MVT will be given to the Board. It will be gradually raised and in the fifth year, 50 percent of MVT will be passed on.
