The Financial Express

From The South

 

`Budget, A Mixed Bag'

Our Policy Bureau

Bangalore, July 19  The increase in motor vehicles tax from 9 to 10 per cent for cars above Rs 5 lakh and 10 to 12 per cent for cars above Rs 10 lakh in the Karnataka budget 2004-05, will make the State's taxes the highest among all the South Indian states.

But Toyota does not see the proposed hike affecting sales. "The minister has looked at taxing the rich the maximum, the middle class mildly and the poor the least," said Mr KK Swamy, deputy managing director, Toyota Kirloskar Motors.

The Greater Mysore Chamber of Industry (GMCI) has described the state budget as a `take off' on the Union budget, which is `rural centric and pro-agriculture'.

From the macro-economic perspective, the most worrisome feature of the budget is that the fiscal deficit has gone up from the earlier 3.54 per cent to 4.26 per cent. It indicates the fiscal prudence measures were not adopted adequately. The coalition government needs to carefully pursue ths objective, particularly non-plan expenditure and salary expenditure, GMCI has said.

The chamber has objected the proposal to remove concessional tax of 4 per cent on diesel and other petroleum products used for captive power generation. Adding insult to injury, the finance minister has simultaneously raised the sales tax on diesel to a steep level of 20 per cent, a GMCI statement has poinetd out.

"We are disappointed that the budget has nothing concrete for industry nor infrastructure development which is key to economic development of the state," said the Federation of Karnataka Chambers of Commerce and Industry (FKCCI) in its statement.

"While development is expected from the rural sector, increase in the taxes on items like diesel etc which are used extensively by the manufacturing and transport industry will result in cascading effect." The levy of cess on sale of industrial inputs will increase cost of manufacture. It is a mixed bag," adds FKCCI.

 
 

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