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Goa proposes entry tax

Sandesh Prabhudesai in Panaji

Goa is seriously considering introduction of 'entry tax' on import as well as export of all the goods, while giving local sales tax relief on the products sold in the state, in order to mop up revenue and improve the state's financial health.

To overcome the huge deficit the state has run into in last one year, the coalition government led by Francisco Sardinha is also relying upon the new uniform tax policy rather than adopting special measures for additional resource mobilisation including hike in petroleum prices.

"It would be the most people-friendly budget," claims chief minister Sardinha, who also admits that Goa's financial health is in a bad shape.

The state usually projects annual deficit of around Rs 300 million, which may be covered this time with the additional share of around Rs 350 million Goa would receive from central taxes, say highly placed sources in the government.

But this does not solve the problem: Sardinha has to mobilise resources to pay back the short-term loans of total Rs 520 million within three months, taken from the state-run corporations - the Economic Development Corporation or EDC and the Industrial Development Corporation or IDC.

Forget the deficit of the new financial year, but the last year's deficit of Rs 130 million itself has swollen to Rs 500 million, while the RBI's overdraft limit of Rs 260 million was also exceeded by the government in the bargain, touching the figure to Rs 500 million.

The government was, thus, left with no other option than going for short-term borrowings. During this time the four-month old coalition government, supported by the Bharatiya Janata Party or BJP, withdrew almost Rs 1.54 billion from the contingency fund, exceeding the limit of Rs 100 million.

To overcome the crisis, the state went ahead with short-term loans from both the state-run corporations in spite of the Industrial Development Bank of India, the member of the EDC board, objecting to such withdrawal.

The prime reason for the state running into cash crisis, claim the officials, is reducing the age of superannuation from 60 to 58 years which has cost the state to the tune of Rs 250 million. The bandwagon of 55,000 government employees has always been a strain for the state.

The government has also announced a new voluntary retirement scheme or VRS for those who are left with five years of service, to be implemented from April. Sardinha expects savings of around Rs 60 million per every 1000 employees, provided they opt for it.

While implementation of the Fifth Pay Commission recommendations and revision of pay-scales of teachers has severely hit the state economy, huge bills of a mini private power plant - Rs 1.5 billion per annum, at the rate of Rs 5 per unit, is another point of crisis. Till date, the state has paid Rs 700 million for 40 MW of power, it is learnt.

In spite of being aware of unhealthy condition of Goan economy, the jumbo cabinet has taken up several out-of-budget developmental projects and has also gone ahead with the plans of purchasing new luxury cars for the ministers and proposed hike in their allowances.

Financial experts in the government have suggested to Sardinha government to introduce the 'entry tax', while also going ahead with the implementation of the uniform tax policy, expecting annual accrual of around Rs 600 million. The working group on uniform tax policy has already submitted its recommendations in this regard.

The proposal of entry tax, thus, plans to fill the uncovered gaps, by imposing entry tax on all the products, but giving relief on sales tax on those sold in Goa. Neither the imported raw materials nor the finished products, which were taken out as a consignment, were levied any tax till date, disclose the authorities.

As Goa's 50 per cent sales tax revenue comes from all kinds of petroleum products, the government is likely to agree to the proposal of charging 20 per cent floor rate for all the petroleum products, except diesel, presently ranging between the tax structure of 8 to 17 per cent.

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