The top Shiromani Akali Dal leadership on Monday succeeded in convincing its alliance partner, the BJP, to kick-start the additional resource mobilisation (ARM) exercise-imposing taxes-to revive Punjab's grim fiscal health.
It was following a four-hour-long "cordial discussion" that the SAD-BJP leaders ironed out their differences on contentious issues and agreed on implementing most of the proposals which, if implemented, are expected to mobilise over Rs 3,000 crore additional revenue, government sources said.
The SAD-BJP leadership agreed to increase the retirement age of the state government employees from 58 to 60, while the BJP also accepted the move to impose property tax, instead of the house tax proposed earlier. The decision of raising the retirement age of the employees, if approved by the council of ministers, is expected to save Rs 1,000 crore annually.
Deputy chief minister Sukhbir Singh Badal, finance minister Parminder Singh Dhindsa, veteran BJP leader Balramji Dass Tandon, BJP ministers Madan Mohan Mittal and Bhagat Chunni lal and the state BJP president Ashwani Sharma were present at the meeting, which was also attended by senior IAS officers of the departments concerned.
Sources say the BJP, which was opposing the move to levy house tax, has instead agreed to the property tax. But the small houses will be kept out of the net of property tax from which the state government is expecting to generate over Rs 500 crore.
It is learnt that during the meeting the issue of power subsidy to the farm sector was hotly debated by the BJP leaders, who made it clear that they were not against small farmers getting subsidy. The BJP leaders told the SAD that their main reservation was against the big farmers getting power subsidy, the annual bill of which is over Rs 4,600 crore.
It was decided to set up a sub-committee that will look into the power subsidy issue and give recommendations as to how only small farmers become its beneficiaries.
After copying the tax pattern of several states, the spin-masters of the state government are aiming at mobilising over Rs 3,000 crore at least from this exercise.
The proposal is to impose property tax (Rs 500 crore), professional tax (Rs 600 crore), and earn over Rs 1000 crore from rationalisation of value added tax. It was also decided that by ensuring strict tax compliance and taking some other steps the excise and taxation department can mobilise Rs 500 crore, transport Rs 200 crore and the revenue department Rs 500 crore from the ARM exercise.
Besides, the leaders also agreed to restructure the transport tax by raising the tax on registration fee of luxury cars and raising the tax slabs of luxury buses.
The strategy of the government is to stop pilferage and enforce natural tax compliance. According to official records, of the total 2,21,929 registered traders in Punjab, about 1,24,908 traders, which is 56% of the registered traders, don't pay any tax due to various reasons.