A week after imposing an additional burden of Rs2,049 crore on the people through tax and tariff hikes, the Kerala Governmenton Wednesday announced further increase in taxes in certain sectors with the goal of mobilising additional revenue of Rs260 crore even as it brought in some relaxation to the water tariff hike announced last week.
A meeting of the Congress-led UDF Cabinet in Thiruvananthapuram on Wednesday decided to increase the taxes on luxury cars and big homes and flats. The Cabinet also gave approval to four Ordinances to be promulgated to implement the decisions it tookon Wednesday and September 17 to hike taxes and tariffs against which the left has already declared an agitation.
Faced with one of the worst financial crises Kerala has faced since the State’s formation 58 years ago, the Cabinet had on September 17 decided to increase taxes in several sectors including land, liquor, tobacco products, water tariff and fees for Government services. The newly announced tax hikes are in addition to the increases brought in through the State Budget for 2014-15.
“We have taken particular care to spare the common man while bringing in some hikes in taxes and fees, something we had to do considering the State’s weakening financial situation,” claimed Chief Minister Oommen Chandy while briefing newsmen on decisions of the Cabinet meeting. “We have also decided to bring in some relaxations,” he said.
As per the Cabinet decision, the tax on cars costing more than Rs20 lakh will be hiked to 20 per cent from the current 15 per cent. Similarly, the tax on houses with more than 3,000 square feet area and flats with more than 2,000 square feet area will be hiked through a slab system depending on the area.
The Government announced a system for one-time settlement of tax arrears in the goods transport vehicles sector by paying 30 per cent of the arrears. The amount payable for one-time settlement of tax dues for passenger vehicles would be 20 per cent, the Chief Minister said. The Cabinet also decided to make tax collection more effective.
Under pressure from within the ruling Congress party and the CPI(M)-led Opposition lDF, the Cabinet decided to make some relaxations in the tariff hike it had announced last week on water. As per the new decision, there will be no hike in the tariff for consumers using up to 15,000 litres of water a month while the ceiling was fixed last week as 10,000 litres.
As per the new decision, consumers belonging to the BPl category will get 15,000 litres of water free of cost a month whereas this was 10,000 litres earlier. For non-BPl consumers, there will be no change in the tariff (Rs 4 for kilolitre) up to 15,000 litres. For those consuming more than 15,000 litres, the charges will be fixed according to 5,000-litre slabs.
“Due to this, the additional revenue from this sector will come down to Rs174 crore, which is Rs32 crore less than the Rs206 crore we had planned to make as per last week’s decision. The Government will give this Rs32 crore as grant to the Kerala Water Authority,” Chandy said. The annual expense of the KWA was Rs922 crore while the revenue was just Rs440 crore, he said.
“A total of 7.94 lakh consumers will benefit from this decision,” the Chief Minister said, adding that the Government had decided to implement some austerity measures to ease the pressures on the State’s economy. “One of these steps is that the Government will not give any display advertisements till March 31,” he said.
The Opposition lDF had threatened to launch a “boycott hiked tax” agitation this month-end against the Government’s September 17 act of hiking land tax and water tariff. According to the lDF, the current crisis in the State is caused by the financial mismanagement by the UDF Government.