Karnataka - Mangalore   

Growers unhappy with increase in sales tax on arecanut

By Our Staff Correspondent

MANGALORE, JULY 22. The All-India Areca Growers' Association here has said that the proposed increase in tax on pan masala, diesel, cashew nut, and coconut oil will affect farmers as it will escalate the cost of production, processing, and marketing of agricultural produce.

Manchi Srinivasa Achar, president of the association, told The Hindu here recently that farmers were the first to be affected whenever the cost of production, processing, and marketing of agricultural produce became high because of the levy of tax. The proposal to increase tax on diesel would make the transportation of agricultural produce costlier, he said. The tax on pan masala, coconut oil, and cashew nut was also likely to affect farmers.

"The tax on inputs, processing, and the end produce has to be seen in its complete perspective. It should be rolled back to help farmers," he said.

Mr. Achar noted that if the Government would have reduced the sales tax on areca nut from four per cent to two per cent, it would have helped farmers' cooperative societies marketing arecanut. But this had not happened, though the cooperative societies in the district had been drawing the attention of the Government to the issue, he added.

An official of Central Arecanut and Cocoa Marketing and Processing Cooperative Ltd. (CAMPCO), who preferred anonymity, said that whenever the Government reduced sales tax on areca nut, its revenue increased.

In 1993-94 and 1994-95, the sales tax on arecanut was eight per cent and CAMPCO had paid Rs. 4.72 crores and Rs. 4.52 crores as sales tax, respectively, to the State Government, he said. In 1995-96 when the sales tax was reduced to six per cent, the tax paid to the Government went up to Rs. 6.41 crores. In 1996-97, the sales tax was further reduced to four per cent and the tax paid by CAMPCO increased to Rs. 6.52 crores. Since then, the sales tax on arecanut had been maintained at four per cent, he said.

Though the sales tax paid in 1997-98 was Rs. 5.85 crores, from the immediate next financial year till 2003-04, there had been an increase in the sales tax revenue earned by the Government.

He said that in 1998-99, CAMPCO paid Rs. 8.25 crores as sales tax, which increased to Rs. 9.50 crores in 1999-2000. The amount further increased to Rs. 10.43 crores, Rs. 10.49 crores, and 10.52 crores in the next three years. The previous year, CAMPCO paid Rs. 10.57 crores in sales tax to the Government, he added. He alleged that some private traders indulged in "undervaluing" while trading in arecanut and paid less tax to the Government. But the cooperative units were prompt in paying taxes, he said.

Sathishchandra, president of South Kanara Agriculturists' Cooperative Marketing Ltd., said that a reduction in sales tax on arecanut would have increased areca nut sales by cooperative societies.

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