THIRUVANANTHAPURAM: Finance minister Dr T. M. Thomas Isaac, after demonstrating the difference he could make to the ailing state’s economy after just one month in office, has flattered to deceive. On July 7, a day before he presented the ‘Alteration Memorandum’, Dr Isaac called an informal press meet and made a triumphant announcement: tax collection during June had grown by 19 per cent, the highest in three years. Dr Isaac’s target for 2016-17 is 25 percent. Now, after 100 days in office, Dr Isaac is silent about tax collection in the months that followed.
Here is the reason. Growth in tax collection during August was a disappointing nine per cent; if monthly collection was Rs 2487.67 crore in August 2015, it was Rs 2701.95 this August. But the shocker was July, the growth was a mere three percent; a virtual stagnation, Rs 2593.21 crore this July from Rs 2518.96 crore in July 2015. “Never before has growth in tax collection gone below 7 percent, not even during K. M. Mani’s tenure” said Dr Mary George, member of the Expenditure Review Committee. She said economic conditions did not warrant such a low figure. “Pay revision has put higher salaries in the hands of people, and the prices of inelastic goods (essential goods that will be purchased even if prices swell) have gone up,” she said.
According to Dr George, the poor growth during July and August also suggests that corruption continues to rule. On July 7, when Isaac announced June's 19 percent growth, the figure was sold as proof of his argument that corruption, not economic slump, was behind the state’s parched revenues. Tax expert Prof Jose Sebastian said the figures were “alarmingly low”. “I don’t see any reason why monthly collection should drop to such base levels,” Prof Sebastian said. “Perhaps it could be the consequence of the Gulf crisis, which is leading to lower remittances and which in turn is affecting the overall demand,” he added. However, officials claim that collection would pick up during September, Onam month when spending reaches a peak in state.
