THIRUVANANTHAPURAM: Finance Minister T. M. Thomas Isaac on Thursday said there was a clear logic behind the LDF Government's Budget proposals to draw new `sectors of luxury' into the tax-net.

Replying to the discussion on `vote on account,' he said the Centre could be counted upon to spread its tax-net to more areas in the coming years and the service sector would be an area it would surely give special attention to.

The States should, therefore, establish their claim on this area with such new devices as luxury tax as early as possible, before the Centre got into the act in a big way [and exploited the full tax absorption capacity of the area].

He justified the luxury tax proposal on cable TV against this context.

Answering criticism from former Tourism Ministers K. C. Venugopal and K. V. Thomas, he said the higher luxury tax proposed on certain tourism activities would not inhibit the growth of tourism industry in the State.

It was basically Kerala's rich natural assets that drew tourists and investments to Kerala, he said.

The Finance Minister also justified the acreage-based cess on rubber gardens proposed in the Budget.

The prices of farm produces would not remain stable in the coming days.

They would fluctuate according to the mood of the international market. There should be a support mechanism to ensure price stability to the extent possible.

He said rubber fetched very good price nowadays, while many other crops of the State were in deep trouble.

"What I had proposed is that we should consider imposing this cess if the rubber prices reigned above Rs.100 a kilogram for three months at a stretch.

The revenue from this sector was down by Rs.100 crores [because of concessions given earlier when the rubber prices were low].

Dr. Isaac said he had had a discussion with the gold merchants who were aggrieved about the hike in tax proposed on ornaments.

"The issue has been solved. The revenue from gold merchants would be at least Rs.80 crores this year," he said.

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