81% of Punjab MLAs crorepatis, govt mulls withdrawing income tax relief on salary
Taxing times: State finance dept moots proposal to do away with exemption to lawmakers from paying income tax on their salary; ending ‘liquor syndicate’ controlled by politicians in next excise policy.
For the Congress government in Punjab, austerity begins in ‘House’. After inheriting an ‘empty treasury’ from the previous Akali-BJP regime, the cash-starved government is no longer eager to foot the income tax bill of its 117 lawmakers, 95 of whom (81%) are crorepatis, according to a report from the Association for Democratic Reforms (ADR), an independent outfit promoting transparency. In percentage terms, this House actually has 7% fewer crorepatis than the previous assembly.
The state finance department has mooted a proposal to do away with exemption to lawmakers from paying income tax on salary. On March 3, 2004, during his previous stint as the chief minister, Captain Amarinder Singh had granted exemption to MLAs from paying income tax on their salary through a notification.
What an MLA takes home
As per the Punjab government website, Punjab MLAs draw monthly salary and fixed allowance of Rs 84,000 and another Rs 30,000 for petrol/diesel. In addition, they avail Travelling and Daily Allowance (TA/DA), with some MLAs claiming even up to Rs 1 lakh a month. Most Punjab MLAs also own farm land and income from agriculture, too, is exempt from tax. Many also avail power subsidy for running tubewells and subsidy for diversifying to horticulture crops such as kinnow. A few of them also have a stake in the state’s transport, liquor and mining business.
“I do not know the reason but Punjab could be the only state to allow income tax exemption to MLAs. MPs too pay income tax on their basic salary,” says Punjab finance minister Manpreet Badal, who has asked all departments to cut costs.
The previous notification, if denotified by the government, may not fetch more than a few crores annually, but will score high on symbolism.
Exemption was challenged in court
The 2004 exemption was challenged in the Punjab and Haryana high court, but was dismissed as the state government submitted that it was footing the income tax bill with no loss to the income tax department. RTI activist, HC Arora, who filed a similar petition before the Punjab assembly speaker in the previous government, says it is ironical that lawmakers can hike their own salaries through unanimous decision and also carry it home tax-free.
“Exemption from payment of income tax is not available to any other public servant, citizen, or even members of judiciary in Punjab,” he says.
The millionaires club has both Opposition and ruling Congress MLAs. All 18 SAD-BJP MLAs are crorepatis so are 87% (67 of the 77) of Congress MLAs. The Aam Aadmi Party (AAP) is not literally a party of commoners. Eight (40%) of its 20 MLAs are crorepatis, while its ally, the Lok Insaaf Party’s MLAs — brothers Balwinder and Simarjit Bains are also crorepatis — reveal their poll affidavits.
Next year’s excise policy to end ‘mafia-raj’ in liquor
The Congress government is also hoping to mop up an additional Rs 2,000 to Rs 3,000 crore by ending the ‘liquor syndicate run by politicians’ through the new excise policy for next year. The state’s fiscal woes have deepened post the launch of the Goods and Service Tax (GST) owing to untimely remittance of share of states in taxes. A small state, it pays monthly salary and pension bill of Rs 2,900 crore and another Rs 1,500 crore on servicing its mounting debt . “The high liquor prices in the state can be tamed and revenue increased manifold by ending the hold of politicians, from both the Congress and the Akali Dal, who own distilleries, in wholesale as well as retail business,” a source said.
Proposals may unite MLAs across party lines
However, both these proposals may bring rare unity — cutting along party lines — among MLAs and be stalled. After red beacons have gone, MLAs already nurse a grouse that their clout is already gone.
“When the CM’s team of advisers and OSDs are being paid higher salaries than us, how can the government pinch our pocket by making is pay income tax,” one of the Congress MLAs said, on condition of anonymity.
The party’s manifesto promise of bringing in a ‘conflict of interest’ law to bar MLAs and ministers from having stake in government-run businesses has also remains unfilled and the CM has announced to keep MLAs out of its ambit.