Make revenue earning departments more efficient
The recent decision of the BJP-led government in Assam to raise VAT by 1 percent on 129 items under the 2nd schedule of Assam Value Added Tax Act, 2003 is really a unpleasant one. With it, the fixed income and low income earners of the State will feel a big fincial burden as the commodities that have attracted a higher rate of tax will be costlier by the corresponding rate of tax or by more. Further, the government of Assam has also raised the entertainment tax under the Assam Amusement and Betting Tax Act, 1939. With its decision to raise the current VAT rate by 1% on 129 items and the entertainment tax, the BJP-led government is targeting to collect higher revenue for the State. Necessarily, Assam facing fund crunch is in need of revenue for the State to be run and developmental works to continue. But while a handsome revenue is necessary for the State government, on the other hand, the interests of fixed income earners, low income earners and pensioners of the State is also of equal importance. If the government of Assam resorts increasing the rates of taxes on essential commodities, then these commodities will be costlier, leading fixed income earners, low income earners and pensioners to suffer a situation of semi-starvation. Under no circumstances, does a welfare government want citizens to starve.
With this in mind, the government of Assam must find an altertive to the decision of increasing tax rates on essential commodities in the State. In the first instance, the Assam government needs to remove all the drawbacks that are prevalent in the State’s revenue earning departments including the Sales Tax department. There are many dealers in Assam that are not registered till now under the Assam VAT Act, and as such they do not pay VAT even when they are liable to pay taxes under the VAT Act.
Again, there are a big number of VAT paying dealers in the State that suppress their total sales and submit returns showing low sales, and hence pay less taxes. These loopholes need to be removed first by the Assam government, rather than raising the current VAT rates on essential commodities. In fact, if the Assam Sales Tax department can collect actual VAT from the dealers, then there will no necessity for the Assam government to raise current VAT rates that contribute to increase in prices of essential commodities. The Sales Tax department must make a correct survey of all dealers in the State and identify the actual number of dealers that are liable to pay taxes under the VAT Act. Next, the department must see to it that no dealers suppress their actual sales nd only submit returns with correct figures.
With these measures, the total tax revenue of the Assam government will certainly increase. Therefore, the State government needs to make its revenue earning departments more efficient if it desires to collect more revenue.