Among north Indian states, Punjab seems way behind as far as growth in revenue from value-added tax (Vat) is concerned. The state registered 10.3% growth in Vat revenue, compared with 22% growth in Haryana and about 25% in Himachal Pradesh in 2006-07, according to information collected from the finance and statistical departments of the three states.
State finance minister Manpreet Singh Badal has confirmed this fact. Admitting that Punjab?s tax base was ?shrinking?, cooperative minister Kanwaljit Singh said recently, ??the tax collection through Vat in Punjab is a meagre 5% compared to 25-30% collected in other states??. ??The state government?s Vat collection from agriculture was 20% at one time. However, in the recent times, there had been a decline of 20% in growth of paddy and consequent decline in Vat collection,?? he said.
Haryana is better off if tax collection is taken as an indicator of its economic health. Punjab collected about Rs 5,150 crore as Vat in fiscal 2006-07, as per data collected from the state revenue department. Haryana, though comparatively smaller, collected about Rs 6,900 crore during the corresponding period.
Expressing concern over the state?s fiscal position, Kanwaljit Singh, told FE at his Punjab Civil Secretariat office, that the ??state?s tax base is shrinking as our industrial growth is negative and there is no big industry here.?? While Singh wants Vat and other taxes to be rationalised, Punjab?s industry minister, Manoranjan Kalia, wants a low rate of tax coupled with ??stricter recovery methods”. “The need of the hour is to give relief to taxpayers and increase the volume of recovery,?? he says.
Sources in the Haryana excise and taxation department say the combined collection from Vat, central sales tax, entertainment duty, passenger and goods tax and local area development tax was Rs 7,620 crore during 2006-07, against Rs 6,362 crore collected in the previous financial year. While Haryana collected Rs 7,620 crore, Punjab was able to collect only Rs 6,900 crores during this period.
Haryana has surpassed Punjab even in overall growth of tax collection. The growth in tax collection in Punjab has been recorded at 11%, whereas the rate in Haryana is 19.77%.
Haryana has also done well in collection of excise from liquor vends that it had started under the system of allotment through draw of lots. Last year, it introduced the new system of allotment of liquor vends through draw of lots to break the monopoly of cartels and bring about transparency. All the states that introduced this system suffered financial loss in the first year, and Punjab was no exception. But Haryana was able to collect Rs 1,223 crore against the target of Rs 1,200 crore, registering a 10.48% growth.