As economy perks up, Kerala's tax collection sees uptick

State taxes dept not enthused as figures lower than pre-Covid times; fuel price hikes help Kerala cover shortfall, says department source

Published: 26th September 2021 06:35 AM  |   Last Updated: 26th September 2021 06:35 AM   |  A+A-

Express News Service

THIRUVANANTHAPURAM: The state government’s tax revenue from the sale of petrol, diesel and liquor has recorded a quantum leap during the past five months, compared to the previous year. Between April and August this fiscal, tax collections saw a rise of 54.2%, 62.2% and 54.6%, respectively. However, the state taxes department is not excited over the increase. This is because the financial year in comparison, 2020-21, had witnessed a drastic fall in tax collections due to the Covid situation. “Certainly, this is a relief and the figures indicate the economy is on the recovery path. Still, the figures are lower than the pre-Covid times. The fuel price hike has helped us limit the damage,” a department source said. 

Many were disappointed when the GST Council decided not to include petroleum products in GST. But the state government can consider an appropriate relaxation in the wake of the upward trend in tax revenue from petrol and diesel, economists say. “Reasonable fuel prices are a precondition to economic growth, investment growth and prosperity. It is high time the state government embarks on a strategic change in resource mobilisation rather than giving undue focus on fuel sales. For instance, revenue streams like the property tax have not been increased as stipulated in the legislations on local self-governments. Such avenues should be explored,” said economist and chairman of the Fifth State Finance Commission B A Prakash.

According to Dr V K Vijayakumar, economist and investment strategist, governments cannot be blamed for increasing the fuel tax, an easy resource mobilisation mode, in difficult times like Covid crisis last year. “At a time when the country faced 7.3% contraction in GDP, resource mobilisation was not easy. But the situation has changed and economy is on the recovery path now,” he said.

“Both the Central and state governments can consider effecting reasonable price cuts before the international crude oil prices go up. The price revision should be balanced rather than populist. It should not have a bearing on the fiscal deficit and debt to GDP ratio. An abnormal increase in debt-GDP ratio can affect FDI and related job opportunities,” he said.  


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