Bommai government to revisit non-tax sources to spur revenue

Fees paid by citizens for various government services may be hiked if Chief Minister Basavaraj Bommai makes up his mind, as the Finance Department is looking to mobilise non-tax revenues while preparing for the 2022 Budget.

The 2022 Budget will be the first for Bommai. It is likely to be an election budget containing promises keeping the 2023 Assembly polls in mind.

However, he might consider taking a bold decision on revising service/user charges, fees, fines and other such non-tax revenue, whose rates have not been changed for many years.

In a circular, the Finance Department, which Bommai controls, has asked all departments to take up a “thorough review” of non-tax revenue sources and revise rates or user charges for various government services.

Non-tax revenue refers to income earned by the government other than taxes.

Royalty on minerals, interest receipts and dividends form a chunk of Karnataka’s non-tax revenue. It also includes day-to-day services provided by the government such as fee for issuance of certificates, charges at state-run institutions such as hospitals, levies and other amounts payable by citizens.

“All heads of departments should check whether the non-tax revenue pertaining to their department has been revised over the last three years and send the details such as revised year, rates etc with revenue estimates for the financial year 2022-23,” Finance Secretary (Budget & Resources) Ekroop Caur stated in her circular.

Sources in the Finance Department lament that such directives have not yielded results in the past.

“One of the major reasons for the stagnation of non-tax revenue is lack of regular and periodic monitoring by the administrative departments and the non-revision of user charges periodically,” Caur stated.

Karnataka’s non-tax revenue for 2020-21 stood at Rs 7,730 crore, which is 4.84% of the revenue receipts and just 0.43% of the GSDP.

“On the revenue side, mobilising the non-tax revenues is the need of the hour,” the Medium Term Fiscal Plan 2021-25 has said. The Fiscal Management Review Committee headed by the chief secretary has advised the government to “augment” non-tax revenues by revising fees collected by citizens.

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