'Lucky VAT' from today

The state government will introduce 'Lucky VAT', a novel lottery scheme to improve sales tax collections from August 29.

According to official sources, this is for the first time that the state government is introducing a lottery scheme in order to encourage consumers to take a bill for purchases they make. Chief minister V S Achutanandan will inaugurate the scheme.

As per the scheme, every consumer who buys goods worth Rs 1000 and above will get a scratch card, which carries a maximum cash prize of Rs 100,000. Prizes below Rs 5,000 will be disbursed by shop-owners themselves, while for amounts above Rs 5,000, consumers will have to approach their nearest Kerala State Financial Enterprise (KSFE) branch.

The scheme is being introduced in accordance with a proposal made by state finance minister Thomas Issac in his maiden budget in June 2006.

He said that the lottery scheme was adopted from Mexico where it proved to be successful.

"The scheme has been conceived against the backdrop of falling sales tax revenue since the introduction of VAT in April 2005." This is contrary to other states where commercial tax revenue has increased considerably after the implementation of VAT.

Kerala registered a meagre growth of 6.2 percent in tax collection, while Punjab clocked 39 percent and Delhi 25 percent in Q1 of 2005-06.

The total commercial tax revenue in Kerala increased to Rs 1206.31 crore in Q1 of 2005-06 from Rs 1136.33 crore in the corresponding period of the previous fiscal. While tax collection in Punjab increased to Rs 1082.45 crore from Rs 778.73 crore.

In Kerala, there has been widespread criticism among traders against the introduction of VAT. Prices of most of the commodities have increased during the last one year giving rise to suspicion that there has been a move to sabotage the VAT regime.

Kerala has a total annual business turnover of more than Rs 100,000 crore. But the average revenue collection is around Rs 4500 crore.

Thomas Issac, in his budget speech, stated that revenue from gold business was a paltry Rs 30 crore while the annual turnover touched Rs 10,000 crore during 2005-06. Keeping this in view, the LDF government enhanced the rate of sales tax on gold and jewellery to 4 percent from 1 percent in the revised budget.

There are a lot of complaints of tax evasion against jewellery shops and home appliances in the state.

To shore up the sagging state's finances, the government is introducing the lottery scheme. The financial position of the state is so worse that it prompted the minister to predict closure of the treasury in near future.