It’s not just smokers who would have to shell out extra bucks towards the chief minister’s Saradha relief fund, cars and some luxury items may also get a bit costlier to pay for the Rs. 500 crore bill that chit fund money-losers have run up.
State finance department officials told Hindustan Times that the chief minister has entrusted them with the task of identifying avenues for raising the Rs. 500 crore, but without damaging the populist image of the government. After a lot of brain-storming sessions over the past few days, they have come up with avenues from where the Rs. 500 crore would come from.
According to officials, a small hike in entry tax from the existing 1% to 1.10%, changes in the pattern on taxes on vehicles (known as registration fees) and a small rise in the luxury tax would be sufficient to raise the amount that the chief minister has in mind.
Announcing the decision to set up the Rs. 500 crore special purpose fund, chief minister Mamata Banerjee indicated on April 24 that Rs. 150 crore would be met through imposition of 10% tax on tobacco products.
But state finance department officials said that going by the amount realised through tax on tobacco products, only around Rs. 55 crore can be raised by imposing a 10% tax.
“That’s what has made our task difficult. We have to fill a hole of about Rs. 450 crore,” said a finance department official who did not want to be named.
The official pointed out that an increase in entry tax from 1% to 1.10% will garner additional revenue to the tune of around R145 crore. In 2013-14, the government aims to raise R1,437 crore on account of entry tax.
In case of taxes on vehicles, payment of mandatory registration fees for 20 years from the existing slab of five years, along with a 5% hike, will generate an additional Rs. 75 crore, finance department officials have estimated.