The State Government in principle has agreed to implement some of the recommendations of the Fourth State Finance Commission (FSFC) for fiscal empowerment of the local bodies for decentralised governance ensuring faster development, as per the Action Taken Report (ATR) presented by Finance Minister Pradip Kumar Amat in the Assembly.The Government has accepted the FSFC’s recommendation to limit the total transfer to the local bodies within 10 per cent of net divisible pool of State taxes projected for the award period from 2015-20. In fact, the Government announced to transfer Rs 12,792.77 crore to the local bodies against the commission’s recommendation of Rs 12,740.08 crore, an increase of 0.41 per cent.
The Government, however, did not accept to leave the local bodies to levy and collect the entertainment tax. “The Government has decided that the present system should continue…..In view of the lack of capacity of local bodies to administer the tax, it is felt necessary to continue to entrust the levy and collection of entertainment tax to the Commissioner of Commercial Taxes,” the ATR said.The FSFC recommended a total transfer of Rs 25,325.03 crore to the three tiers of local bodies during 2015-16 to 2019-20. The balance Rs 12,584.95 crore has been recommended by the commission to be met by the 14th Finance Commission to augment the consolidated fund in order to supplement the local bodies during 2015-20.
The ATR further said the Government would consider the commission’s suggestion on institutional and structural strengthening, resource generation and legal hurdles. The line departments have been asked to examine the recommendations and suggestions on merit and take appropriate follow-up action within a timeframe in consultation with the High level Monitoring Committee headed by the Chief Secretary.The FSFC recommended that Section 131 of the Municipal Act and Gram Panchayat Act be amended to empower the local bodies to impose advertisement tax at the rates decided at their level without seeking Government approval to earn more revenue.
The commission has further recommended that the municipal bodies be given freedom to collect annual licence fees within their jurisdiction for trade and business by suitable amendments to the relevant Acts.The rates and maximum collectable amounts from industries and factories carrying on dangerous and offensive trades have been fixed under Section 290 (7) of the Act decades back. “The commission feels that restrictions should be removed and amount to be charged should be the discretion of the municipal bodies,” it said.
Under the Odisha Gram Panchayat (Minor Forest Produce Administration) Rules, 2002, the gram panchayats are entrusted with regulation of 69 minor forest produces (MFPs) and collection of registration fees from the dealers. The registration fee of Rs 100 per trader irrespective of the volume of transaction continues for more than a decade, it said.
The commission recommended modification of the rules to fix a timeframe for Panchayat Smitis to communicate the minimum procurement price of MFPs, failing which the Gram Panchayats should be given the freedom to fix the price at their level. The Gram Panchayats should be empowered to seize illegally-procured MFPs and inform the Divisional Forest Officers (DFOs) for initiation of penal action.
The ATR said a special supplement to the Budget document in respect of transfer to the local bodies on the basis of recommendation of the Commission shall be presented by Finance Department in Assembly by the end March 31.Besides, the department shall put in place a computerised Management Information System for monitoring the implementation of the commission’s recommendations pertaining to the local bodies during the award period 2015-20.