The Hindu Business Line : No new taxes in TN Budget

Some subsidies
Food subsidy - Rs 1,950 crore
Compensation for cooperative farm loan waiver - Rs 1,628 crore
Free colour TV distribution - Rs 750 crore
Electricity subsidy to State electricity board - Rs 1,479 crore
Free bus pass to students - Rs 300 crore
Free cooking gas connection - Rs 100 crore
Noon meal scheme - Rs 165 crore

TAX-FREE: The Tamil Nadu Chief Minister, Mr M. Karunanidhi, and the Finance Minister, Mr K. Anbazhagan, on the way to present the Budget in Chennai on Friday. — V. Ganesan

Chennai March 23 Tamil Nadu's Budget for 2007-08 pegs the budgetary deficit at Rs 542.99 crore with Rs 441.61 crore on the capital account and a revenue deficit of Rs 101.38 crore. The total capital expenditure of Rs 7,699.18 crore is to be met with net borrowings of Rs 7,257.57 crore, leaving a capital account deficit of Rs 441.61 crore.

The overall deficit is estimated at Rs 7,800 crore with revenues of Rs 44,532 crore and expenditure of Rs 44,633 crore.

There are no new tax proposals in the Budget, presented on Friday by the Finance Minister, Mr K. Anbazhagan, which includes tax exemptions on a range of items of day-to-day use. Buoyant revenues continue to support the subsidies, development and social support programmes of the Government.

Mr Anbazhagan said the total capital expenditure, including loans and advances, is projected at Rs 7,699.18 crore and coupled with the revenue deficit, the projected fiscal deficit constitutes just 2.85 per cent of the Gross State Domestic Product (Rs 2.75 lakh crore).

This was well within the 3 per cent target projected in the Fiscal Responsibility Act, 2003. The deficit will be made good by economy in expenditure and better tax administration, he said.

The State has achieved all the targets fixed under the Medium Term Fiscal Plan in 2005-06 and expects the same for 2006-07. While containing the fiscal deficit, a record capital outlay of Rs 7,861 crore is provided in the budget estimates for 2007-08. The scope of social safety net has been enlarged with a total outlay of Rs 13,179 crore (Rs 11,292 crore).

The State's own tax revenue was Rs 33,834 crore with commercial taxes contributing Rs 21,599 crore.

Mr Anbazhagan announced that the Government has decided to do away with VAT on a range of goods and commodities of daily use, amended the definition of `industrial input' to cover a wide range of items rather than notifying individual items as industrial inputs and decided to compile a list of commodities taxable at 12.5 per cent as under the first schedule of the VAT Act.

Also, some goods such as industrial gases and textile machinery that are consumed as industrial inputs will be taxed at 4 per cent when sold by the manufacturer or trader.

The tax proposals will come into effect from January 1, 2007.

PROSPECTS

Mr Anbazhagan said that in 2007-08, the State's own tax revenue is estimated at Rs 30,988 crore, 10 per cent higher than the revised estimates for 2006-07 (Rs 28,046.09 crore). The overall growth has been assumed at 12 per cent in the Medium Term Fiscal Plan for 2007-10.

The receipts under commercial taxes are estimated at Rs 21,599 crore, representing an 8.6 per cent growth over the revised estimate for 2006-07. Excise receipts are estimated at Rs 4,370 crore, which was 15 per cent higher than in 2006-07. The same rate of growth has been assumed for the future years.

The increasing numbers of immovable property transactions are pushing the growth in stamp and registration fees. The receipts were Rs 3,259 crore in budget estimates for 2007-08, reflecting a 20 per cent growth over 2006-07.

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