Tobacco, petroleum and limestone are set to become more expensive in Meghalaya as the Congress government levied fresh taxes on them in order to generate additiol revenue of Rs.30.91 crore annually
SHILLONG, March 18: Chief Minister Dr Mukul Sangma in-charge Fince today presented a fiscal deficit budget of Rs 819 crore for the year 2015-2016 while announcing the increase in the rate of tax on diesel from the existing rate of Rs 12.5 percent to 13.5 percent.
Dr Sangma also informed that the rate of tax on cigarettes, cheroots, cigars, beedis and smoking mixture from the existing rate of 20 percent to 27 percent.
The government has also decided to introduce a cess on clinker at the rate of Rs 20 per metric tonne as done earlier in the case of cement for the purpose of education.
The Chief Minister also said that the government has decided to withdraw the exemption of 50 paise per litre on diesel which was notified on July 1, 2011 to provide a cushion against the then steep increase in the price of diesel.
Dr Sangma also informed the withdrawal of 50 percent of the exemption of Rs 1.13 per litre on petrol which was notified on June 14, 2012 to provide cushion against the then steep hike on the price of petrol.
Dr Sangma informed that these measures are expected to generate additiol resources to the tune of Rs 30.91 crore annually.
In addition the state government has also decided to propose to enhance the rate of cess on limestone from Rs 20 to Rs 40 per metric tonne, fire clay from Rs 5 to Rs 20 per metric tonne and sillimanite from Rs 300 to Rs 350 per metric tonne for the purpose of supporting primary education.
The Chief Minister indicated that the estimated total receipts is Rs 9282 crore. The revenue receipts are estimated at Rs 8403 crore and capital receipts at Rs 879 crore. Excluding borrowings and other liabilities, the total receipts are estimated at Rs 8434 crore.
Meanwhile, on the expenditure side, the total spending has been estimated at Rs 9583 crore, during 2015-2016 of which revenue expenditure is estimated at Rs 7621 crore and capital expenditure at Rs 1962 crore. Excluding repayment of loans and other liabilities, the estimated total expenditure is Rs 9253 crore.
According to Dr Sangma, the fiscal deficit budget of Rs 819 crore is around 2.8 percent of the GSDP.
Indicating the fiscal road map of the state, Dr Sangma said that during 2013-2014, the fiscal deficit was 1.74 percent and the debt GSDP ratio was 28.63 percent which is below the ceiling of 3 percent and 32 percent respectively set by the 13the Fince Commission.
During 2014-2015, the debt GSDP ratio was projected at 27.44 percent and the fiscal deficit at 2.2 percent of the GSDP.
“As per the fiscal roadmap of the 14th Fince Commission, the fiscal deficit of our state is to be anchored to an annual limit of 3 percent of the GSDP,” Dr Sangma said while presenting the budget.
The Chief Minister also said that the state will be eligible for flexibility of 0.25 percent over and above this for any given year for which the borrowing limits are to be fixed if the debt-GSDP ratio is less than or equal to 25 percent in the preceding year.
He also informed that the state will be further eligible for an additiol borrowing limit of 0.25 percent of GSDP in a given year for which the borrowing limits are fixed if the interest payments are less than or equal to 10 percent.
“Thus the state can have a maximum fiscal benefit of 3.5 percent in any given year. But, the Fince Commission has recommended that the flexibility in availing the additiol limit will be available only if there is no revenue deficit in the year in which the borrowing limits are to fixed and the immediately preceding year,” Dr Sangma said in his budget speech.
The Chief Minister, however said that the most daunting task in presenting the budget this year is the huge revenue shortfall faced by the state due to the impact of the tiol Green Tribul (NGT) ban on coal mining. He said that the state’s own revenue is reduced by Rs 6oo crore annually on account of the ban.
“I am exploring all other possible sources to generate additiol revenue. These unforeseen challenges will only motivate us to work harder and maintain fiscal, social and economic stability,” Dr Sangma said.
The Chief Minister said that the NGT ban has significantly affected the revenue of the state and therefore the total revenue from state’s own tax and non-tax for 2015-2016 is projected at Rs 1, 347 crore a decrease of Rs 538 crore from the year 2014-2015. For the year 2014-2015 state’s own tax and non-tax was estimated at Rs 1885 crore.
In 2014-2015, the state’s own tax revenue was estimated at Rs 1206 crore and state’s own non-tax revenue at Rs 679 crore.
For 2015-2016 state’s own tax revenue is estimated at Rs 1035 crore and state’s own non tax revenue has been pegged at Rs 312 crore.
Dr Sangma also said that the recent enhancement of the rate of tax from 13.5 percent to 14.5 percent under Schedule –IV of the Meghalaya Value Added Tax Act will generate an additiol revenue of approximately Rs 25 crore annually.
He also said that the government is expected to raise revenue of Rs 5.28 crore during the fourth quarter through the increase of Advolarem levy and the reclassification of Brand of IMFL.
“Shouldered with the responsibility of ensuring better fincial magement, the government intends to ratiolise taxes and introduce efficient realisation mechanism. Other measures are being worked out for creating altertive sustaible sources of revenue,” Dr Sangma said while presenting the budget.
The Chief Minister also said that with the recommendations of the 14th Fince Commission, the distinction between plan and non plan is no longer there in respect of transfer of resources.
He said that the government will need to design a balance mechanism in its investment strategy to maintain developmental mechanism and achieve the growth trajectory vis-à-vis efficient investment for administrative expenditure.
Dr Sangma also said that some centrally sponsored schemes have been discontinued and funding patterns are expected to be changed for certain schemes.
The Chief Minister said that the implications of these changes is that the government must become more proactive in utilising the various centrally sponsored schemes.
“We have to ensure that our government is not only effective in accessing funds from the government of India but it is also efficient and accountable in maging its resources. This will also need to be further supplemented by effective measures to ensure stringent fiscal discipline,” Dr Sangma said.
The Chief Minister also informed the house that the centre has accepted the recommendations of the 14th Fince Commission on.
The report, inter-alia, indicates how much each State would receive from the share of central taxes, grants-in-aid for revenue deficit, grants-in aid for Local Bodies and State Disaster Response Fund (SDRF).
Dr Sangma said that the entitlements are based purely on the methodologies and formula adopted by the Commission. The devolution of 42 percent of divisible resources to the states and the shift from scheme and grant based support to tax linked devolution are among the standout features of the report of the 14th Fince Commission.
“The State’s share of tax devolution out of the divisible pool is projected at, Rs 25,347 crore, grants-in-aid for revenue deficit is, Rs 1,770 crore, grants-in aid for SDRF is, Rs 121 crore and grants-in aid to Urban Local Bodies, Rs 32 crore. The State received, 9,842 crore as total transfers during the 13th Fince Commission,” the Chief Minister said.
Dr Sangma also said that the projected transfer for the 14th Fince Commission period is, Rs 27,270 crore, which is an increase of 177 percent over the 13th Fince Commission’s award.
He also said that Meghalaya’s share of grants-in-aid for revenue deficit is comparatively lower than most of the other North Eastern States.
“This is because our revenue gap is much smaller than other states of the North East,” Dr Sangma said in his budget speech.
However, the Chief Minister said that one of the challenges emerging out of the recommendations of the 14th Fince Commission is creating the fiscal space for supporting ongoing projects under Special Plan Assistance which amount to over Rs 2000 crore.
He said that his government have resolved to vigorously pursue this matter with Government of India so that the state receives all its due entitlements to complete these ongoing projects in a time bound manner.
Dr Sangma also said that the likely transition to a new tax regime of the Goods and Services Tax (GST) is expected to result in changes to tax devolution and tax administration.
“With unified rates of taxation for goods and services we will be required to review our strategy of taxation and tax collection. Necessary changes in this regard will be made by us during the course of the year,” Dr Sangma said.