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Last Updated Friday June 09 2017 02:23 AM IST

Was the white paper an anticipatory bail on looming tax rise?

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Finance

The response to the white paper presented by Dr. Thomas Issac, which was tabled in the State Assembly, has been mixed, as some experts differed on certain accounts it contains. A group of financial experts expressed their suspicion that the white paper is an anticipatory bail for an impending massive rise of taxes.

A disparity is being alleged to the accounts pertaining to the cash balance in the treasury. The white paper has overlooked the fact that the economic crisis resulted from the price drop in commodities like crude oil and rubber has caused a fall in the growth rate of tax collection from 17.4 percent to 12 percent.

In fact, there has been a growth in the project expenditure. At the same time, there has been a remarkable growth in the capital expenditure. After 2014, the expenditure for things apart from the project was brought under control.

This group of experts also holds the opinion that the double revision of pay scale in five years had also burdened the UDF led government with heavy debts. This fact was also ignored in the white paper, the experts said.

P.C. Cyriac, former IAS official and Chairman of Rubber Farmers’ Protection Committee, expressed his concerns over the warning given by the Finance Minister that 20-25 percent increase in tax rate is inevitable in Kerala, which is a state already overburdened by taxes. The white paper implies that there will be a rise in unwanted expenditure for which the people of Kerala will have to pay the price.

Mr. Cyric observed that even though the Finance Minister keeps on saying that expenses would be cut down, the words uttered by the Chief Minister earlier has already made it clear that it would be impossible. To drive home his point, Mr. Cyriac recalled the statement by the Chief Minister that Kerala cannot comply with the centre government’s proposal for limiting the revision of pay scale to once in ten years.

Dr. B. A. Prakash, Chairman of fifth State Finance Commission, holds the opinion that the state’s financial situation is not as dreary as projected by the white paper. At the same time, issues like the overdue of Rs. 10,000 crores are real head ache.

When the white paper blamed the deficit for reaching 2.7 percent, it failed to consider that 3 percent of revenue deficit was permissible. A rise in the revenue expenditure caused the deficit rise to 1.4 percent, which otherwise should have come down to zero.

Mr. Prakash also said that the table in the white paper testifies by itself that the accounts of excess borrowings for daily sustenance during the UDF government had been better than that of LDF reign.

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