State to tax luxury goods to ease its debt burden
Be prepared to cough up more for your luxuries from the next financial year. For, the state government is mulling new levies and taxes or luxury goods and services in its upcoming budget, which will be tabled on March 26.
State finance minister Ajit Pawar has revealed that his department was considering new taxes to add more revenue to the state treasury. "We don't want to tax the middle classes or the poor. We will charge in such a manner that it affects the affluent class, who won't really feel the pinch," said Pawar on Wednesday.
Pawar, also the deputy chief minister, will present his second budget in the state legislature in March. Sources in the department said that this could translate into higher duties on liquor, luxury and electronic goods or even premium housing.
One of the reasons for the added tax burden is the slump in the real estate sector, which has led to a dip in the government's revenues. The revenue from stamp duty and registration so far has been one third the estimated target of Rs15,000 crore. Sources said that there is also an apprehension that global slowdown may hit the state hard in the coming months.
Last year, the government's development budget was Rs37,000 crore. If it has to increase its outlay towards development this year, the state government would require additional revenue streams.
The other reason behind introducing taxes is the state's administrative and debt burden. When asked about the state's ballooning debt, which stands at Rs2.07 lakh crore, Pawar promised more resource mobilization to bridge the gap. The deficit is worry, with the state spending nearly Rs18,000 crore annually as interest on payments towards clearing the debt.
Maharashtra's debt is more than that of most other states. While the Opposition has been demanding a white paper on the state's finances, Pawar has reiterated that the debt is within the norms laid down by the Centre.
The debt liability is evaluated vis a vis the Gross Domestic Product, or total annual earnings of the state. It should be within 30 % of the GDP; Maharashtra's debt stands at 26.7 % of its GDP. Pawar said considering central norms, the state's financial position was much better than other state including Gujarat and Andhra Pradesh.