Dr Thomas Isaac presents first budget under GST regime

THIRUVANANTHAPURAM: Being left with very few tools and space to raise resources as a fallout of the introduction of Goods and Services Tax (GST) that subsumed almost all taxes and levies, which were once the fiefdom of the finance ministers for maneuvering during budget planning, the Kerala’s fabled Dr Thomas Isaac this time went on to cash in on the few areas still remained open for sourcing funds.

The budget has based its expenditure to a good extent on the hope that the GST will grow at a rate of 30 per cent during the year and at the same time, the tax department will do its level best to recover maximum dues on account of VAT and for this, an amnesty scheme has also been announced.

The budget has strived to make its presence felt in all politically sensitive areas, and so has also to the deserving. Dr Isaac’s budget has set aside Rs739 crore for Sabarimala, thus silencing all detractors of the government in the name of the recent Sabarimala issue.

The State Government has allocated Rs1000 crore for the second Kuttanad package, another Rs1000 crore for the ever-ailing KSRTC to address its ongoing financial woes, etc, proving that this budget is more of distribution of funds rather than mobilization.

The finance Minister while announcing the sources of revenues for the forthcoming financial year, imposed two per cent tax on hard liquor, wine and beer, brought in one per cent flood cess to be slapped on items falling under the 12 per cent, 18 per cent and 28 per cent GST slabs, besides a 0.25 per cent cess for gold and silver jewellery, thus taking the their tax to 3.25 for the next two years.

The flood cess, which will be charged for two years is expected to help mobilise about Rs600 crore annually. Though some have faulted the idea of flood cess with the argument that this will invariably encourage inflation as the cess is bound to touch upon most day-to-day items, many don’t foresee any such pressures to play out in a big way on account of the cess.

“This cess will have very marginal effect on the price and I don’t think this will pave the way for inflation in the state. And even if it does in a small level, one cannot blame the government for introducing the cess as one can’t help it at this juncture,” said Dr VK Vijaykumar, a leading economist and investment strategist at Geojit Financial Services.

The budget also sought to raise the fair value of land by 10 per cent presumably to march it to the current market price of land.  While the tax on alcohol and beer is expected to rake in an additional Rs180 crore, the hike in fair value of land could add another Rs300 crore to Rs400 crore to the kitty.

The state has allowed the local self-governments to impose 10 per cent entertainment tax on cinema tickets and this income will exclusively go to those local bodies’ exchequer. Moreover, the budget has introduced luxury tax on residential buildings. The residential space with a plinth area of more than 3000 square feet will attract luxury tax depending on the space. The budget has increased almost all fees to the extent of five per cent.

The budget has targeted the vote bank for sure, which is no mean thing as the democratic governments by definition should be working for the welfare of the people. The budget has raised the pension by Rs100 to Rs1200, made handsome allocation for Kudumbashree, announced a comprehensive universal insurance scheme that will benefit about 42 lakh people in the state.

Dr Isaac used the budget time to do a little taking to claim the credit for the welfare pension. “More than 25 per cent of the current pensioners in the state have started enjoying this benefit only after this government came to power,” the finance minister reminded.

If it was Rs1966 crore the UDF government spent on such welfare pension, the amount set aside for such pension by the present government is a whopping Rs7500 crore, he said adding that this will now go up to Rs8000 crore with the Rs100 increase.

Kudambashree will get Rs1420 crore in the budget. The Government is chalking out a project to brand the products made by Kudambashree so they can get a much better market and better pricing too.

In order to promote electric vehicles in the state, the government has announced 50 per cent discount on tax on electric vehicles. At the same time, KSRTC will replace all its buses plying in Thiruvananthapuram city with e-vehicles.

Other Budget Highlights

Rs2 crore has been announced for schemes related to women empowerment. Rs250 crore has been dedicated for employment guarantee schemes.

For Nava Kerala mission, 25 new projects were announced. Rs75 crore for Ayyankali Urban Employment Guarantee Scheme and Rs10 crore for pepper cultivation, which was destroyed during 2018 floods were allocated.

Rs20 crore announced for hunger-free Kerala. Rs1,000 crore earmarked for Kudumbashree mission.​

In a bid to promote tourism, the FM has dedicated Rs278 crore. Another Rs 200 crore has been allocated for road maintenance to Sabarimala under KIIFB.

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