Taxing times: Cough up Rs 200 a month for Punjab’s development

Amid walkouts by Oppn MLAs’, FM proposes to raise additional revenue of Rs 1,500 cr this fiscal; earmarks Rs 4,250 cr for farm debt relief; Manpreet says development tax to be levied on taxpayers engaged in ‘professions, trades, callings and employments’.

Punjab finance minister Manpreet Singh Badal on Saturday proposed a new development tax at the rate of Rs 200 per month on all income taxpayers in the state.

Punjab finance minister Manpreet Singh Badal presenting the annual budget as members on treasury benches look on at the assembly in Chandigarh on Saturday. (Keshav Singh/HT)

Presenting the second budget of the Capt Amarinder Singh-led Congress government, Manpreet said the tax, which comes to Rs 2,400 per annum, would be levied on income tax payers engaged in ‘professions, trades, callings and employments’.

The tax, which is already being collected by ‘progressive states’ such as Maharashtra, Gujarat, Karnataka, Andhra Pradesh and Tamil Nadu since the past four decades, is estimated to yield at least Rs 150 crore this year for the fund-crunched government.

While there is not much clarity on income taxpayers to be covered and its recovery mechanism so far, the state government will bring the legislation for its imposition in the ongoing budget session. As the finance minister has proposed additional resource mobilisation of Rs 1,500 crore in the 2018-19 financial year, more tax announcements or tax rate revision are expected in coming days.

Calling the new tax “nominal”, Manpreet, who presented Rs 1.29 lakh-crore budget, said the government would also bring a new social security legislation to create a dedicated fund for welfare schemes for the weaker sections, besides rationalising non-tax revenue receipts.

The share of own non-tax revenue in revenue receipts in Punjab is one of the lowest among the states. However, there will still be an unfunded resource gap of Rs 4,175 crore. “The money raised from development tax will be spent on social welfare schemes,” he said.

As the state finances have been worrying the debt-choked government, the FM’s resource mobilisation measures, though not a politically palatable move, is being seen as part of his fiscal consolidation effort to pull the state out of fiscal morass, but he will also have to ensure belt tightening and wind down spending at the same time. In its first year, the state government, which had its back against the wall after inheriting “empty coffers”, struggled to find resources to give funds for poll sops.

Manpreet, who has been under pressure to scrounge up cash for promises made in the election manifesto, has apportioned Rs 4,250 crore for farm debt waiver.

The allocation falls short of chief minister Capt Amarinder Singh’s assertion that his government would waive off agriculture loans of 10.25 lakh small and marginal farmers totalling Rs 9,500 crore by November 2018. The FM had earmarked Rs 1,500 crore in the current year.

However, loans amounting to Rs 370 crore of 71,166 marginal farmers were cleared. He attributed the delay to non-finalisation of accounts by banks.