West Bengal finance minister Asim Dasgupta yesterday presented a limited-deficit budget for 1997-98 in the state Assembly. The budget envisages an additional net resource mobilisation of Rs 42 crore and a deficit of Rs 10 crore.
The proposals to introduce value added tax (VAT) on 10 items and single-point tax on 32 goods are the major features of the budget. A widespread reduction in sales tax rates has been proposed. The surcharge on sales tax, introduced in last years budget, has been raised.
Dasgupta said the aim of this years budget was to increase employment generation, promote infrastructure development and attract industrial investment. The overall target is to achieve a state domestic product (SDP) growth of 8 per cent that will help generate employment for 6 lakh people.
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Talking to reporters after presenting the budget, Dasgupta said a new infrastructure development finance corporation was being set up to fund projects that would benefit agriculture and industry. It will provide Rs 50 crore in the next year for various schemes under the government and joint sectors. The state government will provide Rs 15 crore through equity participation in the corporation, while the remaining Rs 35 crore will come from market borrowing.
While new tax proposals will net Rs 70 crore, tax concessions will take away Rs 28 crore, leaving a net additional tax collection of Rs 42 crore. With the total plan and non-plan outlay at the existing rate of taxation showing a deficit of Rs 52 crore, Dasgupta comes to a net deficit figure of Rs 10 crore.
Referring to the permission granted by the Reserve Bank of India to West Bengal Finance Corporation (WBFC) to accept deposits, Dasgupta said the corporation will become a new bank in the state and will soon have branches even at the block level.
The finance minister has proposed a wide-spread rationalisation and across-the-board sales tax cuts for various items. The current highest sales tax rate of 20 per cent plus surcharge is being reduced to 15 per cent plus surcharge.
The tax concessions will cost the exchequer Rs 28 crore. The concessions include an estimated Rs 6 crore loss on account of introducing VAT without a corresponding increase in the sales tax rates. But the finance minister said he was ready to bear the loss if it helped promote industrial investment.
The single-point taxation for 32 items will cause a further revenue loss of Rs 10 crore.
West Bengal will reduce the central sales tax to 1 per cent for inter-state sale of nine items which include VCRs, VCPs and tape-decks. The idea is to encourage sale of these items in the state.
The luxury tax on hotels is being brought down to 10 per cent from the existing 11 per cent. To avoid tax evasion, tax rates on all motor vehicles will be cut from 7 per cent plus surcharge to 4 per cent plus surcharge. For motor parts, tax rates will come down from 10 to 8 per cent plus surcharge. Dasguptas efforts to raise fresh taxes include a substantial increase in sales tax collection by Rs 60 crore. He proposes to achieve this by increasing the surcharge component in sales tax by five per cent. The existing surcharge of 10 per cent will thus go up to 15 per cent. The total sales tax including surcharge will now be 11.5 per cent in place of the existing 11 per cent.