BSY delivers VAT blow
State Budget: Shell out more for almost everything
Cash-strapped Chief Minister Yeddyurappa is going to pinch the pocket of all citizens to mop up additional revenue to improve the state finances.
Value Added Tax (VAT) on a majority of commodities will go up by one percentage point from April 1. This comes at a time when the Centre has just increased the fuel prices.
Cars and two-wheelers will also cost more as the chief minister has hiked the motor vehicle taxes. The lifetime tax on the vehicles would go up by one to two percentage points across the board. For two-wheelers costing less than Rs 50,000, the tax rate would go up from the existing 8 to 10 per cent, while for vehicles costing more than Rs 50,000 and below Rs one lakh, the new tax rate would be 12 per cent as against the existing 10 per cent.
Presenting the State budget for the fiscal year 2010-11 in the Assembly on Friday, the chief minister said he intended to mop up an additional revenue of Rs 1,892 crore through his new tax proposals, which also include increasing luxury tax on hotel rooms. But the chief minister, who is also the finance minister, has not altered the excise duty on liquor while expecting the excise sector to fetch him at least Rs 1,000 crore more revenue in the coming fiscal.
Yeddyurappa continued to show his soft corner for farmers. He has doled out sops worth Rs 3,200 crore to the farming sector in the form of free power, interest subsidy and milk subsidy.
The chief minister announced that the Karnataka VAT Act would be amended to increase two VAT slabs on goods, one from 12.5 to 13.5 per cent and the other from 4 to 5 per cent. At present nearly 550 commodities fall under these two tax slabs. Come next month, these commodities will be costlier. From medicines to IT products, electronic goods to cement, furniture to toothpaste, mass consumed items will become dearer.
However, 54 commodities comprising natural and unprocessed products in unorganised sector like fresh milk, meat, seeds, which have social implications do not attract VAT. Paddy, rice, wheat and pulses continue to be exempted from VAT.
Revenue surplus
The chief minister, while claiming that the State’s financial position was healthier compared with many other states, projected a revenue surplus of Rs 538 crore for 2009-10.
As in the previous year, in the current financial year too the key revenue generating departments — commercial taxes and stamps and registration—have failed to meet the collection target. The shortfall in collection by the commercial taxes department is Rs 2,625 crore, while that of the Stamps and Registration Department is about Rs 1,000 crore. The projected dip in the State’s taxes is as high as Rs 3,383 crore.
The total plan outlay for the coming year has been put at Rs 70,063 crore, nearly Rs 10,000 crore more than the present fiscal year. But there is no significantly higher allocation for prime sectors like agriculture, irrigation, energy and health.
The sluggish growth apart, the chief minister announced certain new schemes for the next fiscal.
Two new housing schemes are planned for urban poor and a pension scheme for unorganised sector workers is on the anvil. A new scheme Jalasiri is planned to promote rain water harvesting by constructing 2 lakh rain water harvesting structures.
Through Mukhyamantri Nagarothana Yojana, the government intends to provide basic amenities in urban areas outside Bangalore.
The government has also committed itself to increase the reservation of seats for women in rural bodies from the 33 per cent to 50 per cent by amending the relevant legislations.
Bonanza for Shimoga
Continuing to pamper his home district, Yeddyurappa announced a new agriculture university for Shimoga, Rs 20 crore for Shimoga Medical College and Rs 10 crore for the veterinary college in Shimoga. In addition, Sahyadri Heritage Development Authority is planned in the district.
Another district which attracted special attention is Bellary. He has allocated Rs 10 crore for Sri Krishnadevaraya University and Rs 50 crore for the controversial theme park in Hampi.
