Despite crisis, Kerala FM refrains from tax hike

This is not the time to cut expenditure, levy higher taxes, says Balagopal

Despite the severe financial crisis faced by the government, Finance Minister K.N. Balagopal did not announce any new tax proposals in his maiden Budget, saying that this is not the right time to reduce expenditure and levy higher taxes.

“Demonetisation, implementation of GST without much preparation, Cyclone Ockhi, floods, first and second waves of the pandemic and the resultant economic slowdown have all adversely affected State revenues. Revenue growth rates have fallen to the lowest levels in the recent past,” the Minister said.

When economic slowdown and natural disasters ravaged the State, the government could have stepped aside by reducing expenditure. “But, that is not the approach of the Left Democratic Front. During a crisis, the Left’s way is to help people, even by borrowing. The first Pinarayi government has done that and this government will also follow the same policy,” he said.

Austerity measures

The Finance Minister added that austerity measures would become inevitable. “The government will formulate a comprehensive plan for revenue enhancement and expenditure reduction. Preliminary activities have already begun.”

Amendments in the Kerala State GST Act would be made corresponding to the amendments incorporated in the Central Goods and Services as per the recommendation of the GST Council.

When normalcy returns

On his plans once normality was restored, the Minister said the State GST machinery was being thoroughly streamlined. “If everyone starts remitting tax, fiscal stress can easily be overcome. People appreciated that by contributing liberally to the CMDRF.” He hoped that citizens would be similarly diligent in remitting their taxes.

The Finance Minister said the government did not believe in tax collection by intimidating traders and industrialists. There was a small minority that tried to evade taxes. Steps would be taken to penalise them. Fresh revenue sources would be explored once the economy returned to the growth track.

Once the COVID-induced crisis was over, reforms would be implemented in issues pertaining to tax and non-tax revenue after considering the recommendations of the State Finance Commission, he said.

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