Given the poor state of Kerala's finances, it was a foregone conclusion that finance minister K N Balagopal would impose some additional burden on the public to boost revenues. However, he has done it in a way that would not seriously hurt the common man.
Of the three tax possibilities he has played with, one is morally indisputable (green tax on old vehicles), the second has been traditionally kept suppressed (taxes on land; Basic Land Tax and fair value) but the third (one-time motor vehicle tax) could dampen demand.
As it stands, each of the three administrative units - panchayat, municipality and corporation - have two land tax slabs. The Basic Land Tax (BLT) of both these slabs in all the three units will now be revised.
Besides, Balagopal will also introduce a third slab for possessions above 40.47 ares (nearly an acre) in panchayat, municipality and corporation areas.
Here are the existing two slabs and BLT for all the three units. Panchayat - up to 8.1 are (20 cents) Rs 2.50 per are; above 8.1 are/20 cents, Rs 5 per are. Municipality - up to 2.43 are (6 cents) - Rs 5 per are; above 2.43 are/6 cents, Rs 10 per are. Corporation - up to 1.62 are (4 cents), Rs 10 per are; above 1.62 are/4 cents, Rs 20 per are. (One are is 2.47 cents).
The BLT was last revised on April 1, 2018. Nonetheless, it is also certain there will not be a dramatic increase in the BLT because Balagopal expects just Rs 80 crore as additional revenue from the BLT revision.
In addition to the overhaul of the BLT, Balagopal has also announced a uniform fair value increase of 10% across all segments. This measure is expected to mop up Rs 200 crore.
However, this is just a tentative move before the big fair value revision to take care of all the anomalies is finally put in place. Balagopal wants a share of the enhanced value certain properties enjoy as a result of their proximity to big infrastructure projects.
"The fair value of land is not in tune with the current market values in many areas of our state. Government has undertaken massive infrastructure projects like National highway expansion, Metro Rail project, Core Road network extension etc., as a result of which the market values of land have increased manifold in the neighbouring areas," Balagopal said during his Budget speech on March 11. "To address the issues of anomalies in the fair value, the government will constitute a high-level committee to look into this issue and ensure that fair values reflect the actual ground realities," he said.
Till then he will make do with the uniform across the board 10% hike in fair value. From this, he expects Rs 200 crore this fiscal.
In addition to the overhaul of the BLT, Balagopal has also announced a uniform fair value increase of 10% across all segments.
Since the stated objective of the 'green tax' is the end of pollution, the imposition cannot be argued with. Even though 'green tax' is part of a nationally accepted policy, Balagopal expects just Rs 10 crore as additional revenue from the 50% hike in 'green tax' on vehicles.
"It is necessary to discourage the use of diesel vehicles and encourage electric vehicles," Balagopal said, justifying the 50% 'green tax' hike on vehicles older than 15 years. The centre has a policy to scrap old vehicles.
In addition, Balagopal said 'green tax' will be levied on the following categories of diesel vehicles except motorcycles: three-wheeler vehicle, private motor vehicles, medium motor vehicles, heavy motor vehicles and other diesel vehicles.
The only imposition that could dampen demand is a one-time motor vehicle tax on motorcycles costing up to Rs 2 lakh. The tax has been increased by 1%. Now, it is 6% of the purchase value. This 1% increase is expected to bring Rs 60 crore this fiscal.