The Hindu : Kerala / Thiruvananthapuram News : Isaac for rethink on cess once VAT gains in buoyancy

Online edition of India's National Newspaper
Saturday, Mar 08, 2008
ePaper | Mobile/PDA Version

Kerala

Kerala - Thiruvananthapuram

Isaac for rethink on cess once VAT gains in buoyancy

Special Correspondent

Says State is on its way to fiscal consolidation

THIRUVANANTHAPURAM: Finance Minister T.M. Thomas Isaac has said that he would do a rethink on the proposed 1 per cent cess on VAT (value-added tax) and Sales Tax once VAT gains in buoyancy.

Addressing an analysis on the ‘Kerala Budget 2008’ organised by the Kerala Chamber of Commerce and Industry here on Friday, Dr. Isaac said the cess had been proposed to raise funds for the health insurance scheme and social security package announced in the budget. The alternative before him was to raise the VAT rates on individual items from 4 to 5 per cent and 12 to 15 per cent. Union Finance Minister P. Chidambaram had permitted such a course of action and Gujarat had already done that, but he did not wish to that extent, Dr. Isaac said

The Minister said Kerala was on its way to fiscal consolidation.

The State would become better equipped to meet its capital expenditure challenges once the revenue increased at the current rate. This would enable the State to achieve a higher cap on borrowings and such borrowed money would be available for taking up infrastructure development projects on a bigger scale.

He said that most other States had achieved revenue surplus by squeezing the expenditure on social sector spending. Kerala, he said, did not wish to do so. He had gone in for higher social sector spending without hurting anyone.

The compounding facility extended to gold trade formed part of these. His information was that the turnover of gold trade in the State was in the region of Rs.15,000 crore annually.

Printer friendly page
Send this article to Friends by E-Mail

Kerala