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Desperately seeking Goa: New taxes may follow booze hike

Sandesh Prabhudesai in Panaji

Following the hike in excise duty on imported Indian made foreign liquor and beer, Goa is pondering introduction of professional tax and entertainment tax to overcome the acute resource crunch.

Chief Minister Dr Wilfred de Souza, heading a coalition government supported by the Bharatiya Janata Party from outside, is trying hard to get a grant of Rs 1.5 billion from the Centre to arrest the slide to deeper problems. The tourist state has been hit hard by the implementation of the Fifth Pay Commission recommendations.

But the problems might continue in spite of the Centre's grants, state Finance Secretary Vivek Ray said. Widening of the existing tax base seems inevitable, he added. Goa's revenue earnings are presently from three sectors -- mining, tourism and industry.

As suggested by the Planning Commission, the bureaucrats have suggested to the coalition government to introduce new measures of resource mobilisation. Although it would actually materialise in the next Budget, plans could be chalked out only if the state cabinet approves it.

As the service industry is growing here rapidly, the tourist state is also planning to impose professional tax here, on the lines of Karnataka and Maharashtra. The powers of collection however may be given to municipalities and panchayats, Ray said.

He also feels Goa must review its policy on entertainment tax, which is presently restricted to movies and video shows. Considering the growing potential in the tourist state to several other ticketed entertainment shows, the plan is to bring them under the taxation cover.

The plan is to also impose ad valorem excise duty for quality brands of liquor, whether imported or manufactured locally, while also applying the same criteria for tax collection on vehicles. Goa, incidentally, is sought out for liquor consumption and purchase of vehicles, due to less amount of taxes.

The state government has also pleaded with the Centre to withdraw the tax holiday schemes for all the states since Goa has become a "victim" of such a five-year tax holiday, which has been now extended further, in order to attract industries here. Goa is roughly losing around Rs 500 million annually due to the tax holiday scheme.