THIRUVANANTHAPURAM: The State Government has urged the Centre to raise the ceiling for profession tax and delegate powers for collecting tax from buildings housing Central Government offices. This is being done with a view to finding funds to tide over a worsening financial crisis and raise the income levels of local self-government institutions.

The Government has sought an amendment to Article 276 (2) and 285 of the Constitution so that powers will be decentralised to the local bodies to bring more professionals into the tax net. This would also empower it to collect building tax from Central institutions.

Although the State has set a model in decentralising powers to the local bodies, almost all of them face acute funds crunch. There are about 400 `minus panchayats,' those without having `own funds.' Many municipalities and even corporations are finding the going tough to manage routine functions.

Profession tax is being fixed in proportion to the annual income. According to Article 275 (2), the total amount payable to the State Government or local body by way of taxes on profession, trades, callings and employments should not exceed Rs.2,500. This rule was framed 50 years ago. In spite of the remarkable increase in the salaries being drawn by those in various sectors, the profession tax ceiling has not been raised. This has also created a disparity among the salaried classes. While a large number of professionals who draw huge amounts continue to remain outside the tax net, Government employees and other sections are made to pay the tax at the prescribed rate.

Similarly, Article 285 has exempted buildings of the Central Government from paying property tax. Local Administration Minister Paloli Mohammed Kutty has written to Union Panchayati Raj Minister Mani Shankar Aiyar seeking an amendment of the Constitution in this regard.

By bringing more professionals into the tax net, the local bodies are expecting a 25 per cent increase in their income. Powers to levy tax from Central Government property would fetch an additional 5 per cent. Thiruvananthapuram and Kochi corporations, which have a number of IT companies and Central Government offices within their limits, will be the major beneficiaries if the Centre gives the nod for amending the Constitution, sources said.

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