The Congress party will have to spend an estimated Rs. 59,000 Crore to implement the guarantees announced in its election Manifesto as it is if fully implemented, according to preliminary estimates of Government. But at the moment, there seems to be no other way but to resort to new taxes and fresh borrowings to avoid the burden it will put on the state exchequer in Karnataka.
With Lok Sabha elections due next year, the introduction of new taxes or changing the nature of existing taxes to impose additional taxes could hamper the party’s victory in the upcoming elections.
The State Government is also not in a position to take a fresh loan. It has its own set of rules. Thus, the Siddaramaiah-led Government is in a situation where it is unable to keep its promise. In spite of all these difficult situations, the Chief Minister has vowed to implement five guarantees in a phased manner.
Chief Minister will present the new budget during the upcoming Assembly session. The proposal for several new taxes is likely to be included in it. Deputy Chief Minister D. K. Shivakumar, who already holds the Bengaluru development portfolio, has made a close reference to the issue and predicted a hike in water tariff. So far, it has not been possible to completely stop illegal tap connections in a great city like Bengaluru.
One of the ongoing tax leakages within the limits of the Bangalore Water Board is also one. The Authorities are reluctant to take action against the illegal connections as influential persons are behind it which leads to tax leakages. Now, the Deputy Chief Minister has proposed a hike in water tax. According to him, the water tax has not been revised for a long time, leading to a shortage of resources for the water board. Therefore, a tax hike is inevitable, he said.
There, the Government will go ahead with increasing the water tax. The Government will also go ahead with an increase in the source of revenue such as excise, stamp duty and registration fees, as well as property tax.
The real estate business, which was mainly confined to Bengaluru, has now spread to other districts of the state and the price of land has become expensive. The real estate industry, which has expanded residential activities through the creation of new layouts, is now politically strong as well and has grown to a large extent to play a crucial role in government formation and elections.
Naturally, it is a source of income for the Government exchequer. Thus there are chances that the Government will impose new taxes on the real estate industry. All the Governments that have come so far have been silent on the illegal mining, which has resulted in tax evasion of crores of rupees to the state exchequer.
Justice Santosh Hegde, in his report on illegal mining when he was the Lokayukta, found that huge amounts of tax money belonging to the Government had been siphoned off and recommended that action be taken to recover the same. The previous BJP Government and coalition Governments did not take any action in this regard. Siddaramaiah, who had earlier taken out a padayatra from Bengaluru to Ballari over the illegal mining, has now come to power and should have reached the Government’s coffers in a fair manner, but crores of rupees are missing. It remains to be seen whether apart from taking action against tax evasion, will he also show the courage to bring it back to the Government’s treasury.
The Chief Minister is also likely to focus on taxes collected from the IT-BT sector. The biggest challenge for the State Government is to replenish the resources that will be depleted even after all these possible new taxes. With the BJP Government in power at the Centre, the possibility of the State Government getting free release of various grants besides its share of taxes from the Centre is less. In such a situation, a conflict with the Centre may also be inevitable.
From a political point of view, there are many obstacles within the party to achieve what Chief Minister Siddaramaiah wants. Each minister in the state Cabinet has been making statements on the implementation of guarantees on a daily basis, adding to the existing confusion.
This is the situation of the ministers and the officers are even more miserable. They have been defeated and helpless in the matter of convincing those at the helm of administration of the facts of the state’s economic situation.