CHENNAI: A reading of the White Paper hints that the State government may be considering hikes in power tariff, property tax, motor vehicle tax, and water cess. This may be necessary to break out of the vicious cycle of increasing debt and interest of the State.
According to the paper, TANGEDCO recovers Rs 2.23 a unit from domestic consumers on an average. Domestic tariff subsidy is an average Rs 1.09 a unit as against the total cost of supply of Rs 9.06 a unit; this leaves a large recovery gap of Rs 5.74 a unit.
“With 32,639 million units of electricity supplied to the domestic sector, the total loss on account of domestic supply is Rs 18,735 crore in 2020-21. Clearly, those who consume more electricity are receiving greater subsidies,” the White paper stated. The report also highlighted the high industrial tariff, which has made Tamil Nadu uncompetitive as an industrial destination.
The paper also underlined that property tax has not been revised since 2008. “As regards municipalities and town panchayats, there is a provision for periodic revision of property taxes once in five years in the Tamil Nadu District Municipalities Act, 1920. The last general property tax revision, however, was done in 2008,” the report stated.
Tamil Nadu’s property tax collection as a percentage of Gross State Domestic Product (GSDP) is significantly lower than States like Maharashtra and Andhra Pradesh.
“The fifth state finance commission had recommended a target of 0.6 per cent of GSDP by the last year of award period 2021-22. Achieving even this reduced target is doubtful. This leaves a large potential of tax collection untapped even after more than 25 years of local self-governance,” the report added.
The report states that the State’s Own Non Tax Revenue (SONTR) for 2020-21 is Rs 9,040 crore and its 0.47 per cent of the GSDP.
“There are many opportunities to raise more revenue through non-tax receipts like royalty on mines and minerals, interest receipts, and other fees and charges. This is a source of revenue underutilised due to both non levy and leakage,” the report added.