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Kerala to revise VAT collection target

Special Correspondent

VAT collection in the State till July stands at Rs.600 crore

THIRUVANANTHAPURAM: Kerala has started putting up a fight to overcome the financial difficulties that have been plaguing it in the recent years.

The collection of Value Added Tax (VAT) during the four months till July this financial year surpassed the sum collected during the same period last year by Rs.600 crore. Encouraged by the results, Finance Minister T.M. Thomas Isaac on Thursday said he would revise the VAT collection target for the year to Rs.4,600 crore.

If the new target is achieved, it will mean an unprecedented 50 per cent year-to-year increase in the collection of commercial taxes. The collection last year came to Rs.3,059 crore. In the Budget in June, he had pegged the expectation (rather ambitiously, it was thought then) at Rs.4,000 crore.

Dr. Isaac called a meeting of the tax officials from southern districts here on Thursday to tell them that the Government would watch their efficiency, fix targets at individual and unit levels and reward them for good performance. The Government will put in place a system to monitor efficiency. Corruption, a malaise that inhibits tax collection and erodes the credibility of the department, will not be tolerated, he told them.

VAT collection last year had shown a buoyancy of just five per cent. Dr. Isaac said that following up the 50 per cent increase that should be achieved this year, the collection should continue growing by at least 20 per cent in the coming years. In four or five years' time, it would then be possible to bring the State's revenue expenditure on a par with revenue receipts.

He said that, as of now, the State's financial condition was extremely grave. Pay revision for Government employees has imposed an additional burden of Rs.3,000 crore on the exchequer. Receipts by way of loan from the National Savings Scheme will be short of expectation by Rs.1,200 crore this year, judging by current trends. The Centre had indicated that there might be a cut in assistance from the Debt Relief Fund.

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