Goa : Tax and Economic Reforms
The economic liberalization in India , initiated in 1991, with principles of Liberalization , Privatization and Globalization (LPG) of the country’s economic policies, with the goal of making the economy more market and service-oriented and expanding the role of private and foreign investment. Specific changes include a reduction in import tariffs, deregulation of markets, reduction of taxes, and greater foreign investment. Liberalization has been credited by its proponents for the high economic growth recorded by the country in the 1990s and 2000s. And it has positive impact on the state of Bihar as can be visibly seen from various sectors.
India’s GDP has increased thereafter and also the GSDP of state has increased many folds. The GSDP at constant (2011-12) prices for the year 2015-16 (Quick Estimates) is estimated at above 37,520 crore as against 34611 crore in the year 2014-15 (Provisional- Estimates) thereby reflecting a growth of 8.41 percent as against 9.64% in 2014-15.
Agriculture Sector
In recent years agriculture plays an important role for the economy. Three areas where there is need to focus to improve the productivity in the agriculture sector are embodied i e. Promotion of inclusive growth, enhancement in rural income and sustenance of food security. The transformation in agriculture as to be steered by raising productivity in agriculture, by investing in efficient irrigation technologies, and efficient use of all input. Government aimed to double the farmers income by 2022. It must be done by focusing on potential crops like Cashew, Coconut, Mango and Paddy by increasing productivity. Various schemes are being implemented to improve the performance in agriculture.
To increase the productivity, the availability of water is the most important element in the agriculture. Irrigation is one of the critical input for improving productivity in agriculture. Various schemes are being implemented in the state to increase area under irrigation and also to improve existing irrigation system.
Industrial sector
Economy of Goa is rapidly increasing because of accelerated industrial development. The main aim is to create sustainable employment opportunities mainly to the local people of Goa. It also includes environment friendly industrial development ensuring balanced growth of regions, a facilitative regime that explores and unleashes the energies of the private sector to create an environment in which existing and new industries can prosper.
Micro, Small & Medium Enterprises also plays an important part to increase the gross domestic product of the state. Government of India had enacted the Micro, Small, Medium Enterprises Development Act 2006 w.e.f 02/10/2016 and the industrial units were classified as Micro Small and Medium Enterprises (MSME) separately based on the investment in plant and machineries. It plays part by promoting industrial growth as well as by providing employment opportunities to vast number of people of Goa.
Tourism : It is one of the major service sector that has huge conribution to the economy of the Goa. Goa, a paradise of scenic charm, settled beautifully amidst seas and lush greeneries, is a dream destination of millions of travellers across the globe. The glistening sands, exotic beaches, the architectural splendors of its temples, churches, old houses and rich culture has become a popular global leisure destination which attracts domestic & foreign tourists from all over the globe.
Goa has an ideal tourist destination. Several initiatives and tourism infrastructure projects were undertaken to augment the carrying capacity of the State.
Tax (Revenue and Expenditure)
There was revenue surplus of 158.82 crore in 2016-17. The revenue receipts for the current year were estimated at 9,361.96 crore and the revenue expenditure was estimated 9,203.14 crore.
The total receipts (Revenue + Capital) were estimated to 11,853.51crore (B.E) for the year 2016-17, comprising of revenue receipts of 9,361.96 crore (B.E) and capital receipts of 2,491.55 crore (B.E). The total receipts estimated for the year 2016-17 is 16.60 percent less than the Revised Estimates of 2015-16.
The total expenditure (Revenue + Capital) estimated for the year 2016-17 is 13,111.19 crore (B.E), comprising of revenue expenditure of 9,203.14 crore (B.E) and capital expenditure of 3,908.05 crore (B.E).
Receipts and Expenditure
Receipts can be broadly divided into Revenue Receipts and Capital Receipts.
Revenue Receipts of the State comprise of Share in central Taxes, Grants–in-aid from Central Government, State’s Own Tax Revenue and State’s Own Non tax revenue.
- i) Share in Central Taxes
The Share in the central Taxes comprises of Corporation Tax, Taxes on Income other than Corporation Tax, Taxes on Wealth, Customs, Union and Service Tax. The state has received 1072.87 crores from central Government as State share in Central Taxes and Grant-in-Aid representing about 15% of our Budget. Since 2015-16, there has been more than three-fold increase in the Central transfer to the State, pursuant to the recommendation of the Fourteenth Finance Commission
- ii) State’s Own Tax Revenue
The State Own tax Revenue comprises of Sales Tax (V.A.T), State Excise, Stamp Duty, Registration fees, Motor Vehicles, etc. The State has recorded an increase of 1,976.70 Crore during the period 2012-13 to 2016-17 (B.E) registering an annual compound growth rate of 13.72%.
iii) State’s Own Non Tax Revenue
Revenue from Power and water Supply are the major sources of non tax revenue of the State. It has been seen that non tax revenue collection has shown a decrease in the year 2015-16 (R.E) by 114.40 crore as compared to the previous year, however, during the year 2016-17(B.E) there has been seen an increase of 402.39 crore.
- iv) Grants–in-aid from Central Government
The central government provides grant in aid to the state government for the implementation various schemes. Funds received from the central government are not a loan, and hence does not have to be repaid.
Revenue Expenditure
Revenue Expenditure can be classified into Plan and Non-Plan expenditure. The annual compound growth rate of revenue expenditure works out to be 16.63 % during the period 2012-13 to 2016-17 (B.E).
Capital Receipts
Capital receipts are broadly classified into four major groups i.e internal debt, loans and advances from central government, non-debt capital receipts and public account – net (i.e. receipts from public account minus expenditure under public account).
Capital Expenditure
Expenditure incurred under Plan for development works and debt repayment constitute around 99 percent of the capital expenditure incurred by the State. The capital expenditure is showing an increasing trend. Capital expenditure which was 1,285.11 crore during 2012-13 increased to 1,804.39 crore during 2014 -15 and further to ` 3,354.46 crore during 2015-16 (RE).
Revenue Deficit
During the years 2012-13 & 2013-14, revenue deficit to the tune of (-) 215.92 crore and (-) 353.51 crore was observed in the State. However, the situation improved during the year 2014-15 where the State experienced revenue surplus of 278.44 crore. The Revenue deficit amounting to (-) 137.09 reoccurred during 2015-16 (RE). The Revenue Surplus for the year 2016-17 (BE) is expected to be 158.82 crore.
Fiscal Deficit of the State shows an increasing trend. Fiscal Deficit which stood at (-) 1,137.36 crore in 2012 – 13 increased to (-) 1,369.87 crore in 2013 -14.
Primary Deficit stood at (-) 336.65 crore during 2012-13 increased to (-) 479.21 crore during 2013-14. It is interesting to note that Primary surplus was observed in the State during 2014-15 amounting to 58.92 crore.
Different types of taxes
Nearly 70% of the revenue comes from Commercial Taxes. Commercial Taxes comprise of VAT, CST, entertainment Tax, luxury Tax, Green Cess and Non-Biodegradable. Revenue from Excise had decreased drastically from 315.31 crore to 221.80 crore (up to Jan 2017).
It is also observed that department of Mines has earned a revenue of 219.20 crore for the year 2016-17 (upto January’17) as compared to 216.30 crore of the previous year. The share of revenue earned from Notary Services has also declined from 171.32 during 2015-16 to 108.83 during 2016-17.
Goods and Service Tax
Government of India passed the act for the indirect taxes. In this tax, many indirect taxes has been subsumed in the GST. The State has actively participated in all GST Council meetings in order to present the views of the State in an effective manner on all issues concerning proposed laws, rules, processes and systems for GST.
The model GST law has been drafted and discussed in GST Council. The GST Council has also decided the bands of tax rates for GST. It has constituted a Committee to study individual goods and feed them into the category of tax rates. Cross empowerment is being provided in the Acts so as to avoid dual authority over tax payers. The State authorities will be empowered to administer the CGST and IGST Act and so also the Central Authorities would be empowered to administer SGST Act. The calculation of revenue base of States and the formula for compensation on account of loss have been decided. The threshold limit for registration and the compounding limits have also been agreed upon. Consensus on these issues will pave the way for introduction of GST between July to September, 2017.
A number of benefits are expected to accrue not only to the Central & State Government but also to the consumers, business & industry in the ensuing GST regime. Under the GST model, all the Central and State Government taxes will be merged into a single tax, which will reduce cascading or the double taxation effect.
Impact of GST in state
The Department of Commercial Taxes is fully prepared to migrate over to the GST regime. With the enactment of the State GST Act which I will bring before this House shortly, the State will be set to implement GST from the expected date.
Goa being more of a consuming State, wherein services play a major role in the State economy; it is anticipated that the State will gain. Any shortfall will be compensated by the Union.
Recent Tax proposals
Value Added Taxes
The registration, including its renewal, under VAT and other Commercial Taxes is for a period of three years. With the Goods & Services Tax (GST) expected to be rolled out by 01st July; the registration under VAT and other Commercial Taxes will not be valid for the dealers, other than petroleum products and liquor. To provide some relief to all such dealers, provision is provided to waive off the renewal fees as applicable.
To further promote green initiative, there is proposal to exempt VAT on sale of electric vehicles.
Excise
There is new proposal to levy an additional fee of 1,00,000/- to the manufacturer of high bouquet spirits who imports Concentrated Alcoholic Beverages, for the purpose of sales to other manufacturers; within or outside the State. An export fee of 10/- per bulk litre will be levied on the sale.
Registration of an old four wheeler, which is more than 15 years old, is cancelled. A new proposal to allow adjustment of the Road Tax paid on the old vehicle against registration of a new vehicle has been proposed.
Casino Fees
There is need to revise the fees for renewal of license, annual recurring fees and fees for transfer of license; for land based and off-shore casinos.