THIRUVANANTHAPURAM: The State Government's tax revenue increased by a record 23.17 per cent in 2006-07, Finance Minister T.M. Thomas Isaac said here on Tuesday.

He said the revenue from Value Added Tax (VAT) went up by 51 per cent in the year to touch the level of Rs.4,469 crore. VAT had brought a revenue of only Rs.2,949 crore in 2005-06.

He said the overall tax revenue went up to Rs.8,669 crore in 2006-07 from the level of Rs.7,038 crore in the previous year. The year-to-year growth in revenue this time is the highest since 1958, he added.

Jubilant Minister

A visibly jubilant Dr. Isaac, briefing media after an official meeting to review the Government's revenue collection performance, said that the State would surmount its financial difficulties in three-four years' time if the new trend in receipts could be sustained.

He said that a wide gap still existed between revenue receipts and revenue expenditure. But, the State was well on the way to financial recovery. The revenue receipts at the moment came to 13 per cent of the State Gross Domestic Product (SGDP). He expressed the confidence that the receipts could be enhanced to 16 per cent and the revenue expenditure brought down to 17 per cent of the SGDP by the year 2010.

"If we could maintain the present tempo and if the Finance Commission were to provide Kerala with a higher share of the Central taxes than at present, the State would be in a position to wipe off its revenue deficit by 2010," he said.

Dr. Isaac said the Government's focus was not only to tone up the revenue collection machinery, but also to ensure effective utilisation of the funds available. The Government would diligently avoid extravagance. There was nothing wrong with borrowing, so long as the borrowed money was spent on meaningful development works and asset creation.

Dr. Isaac said that the Government would pay the arrears due to the contractors for the works executed by them within the next two months. The Cabinet would shortly discuss the plan for clearing the contractor's bills.

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