Crucial source of income more than doubles in just three years
the goan I network
PANAJI
Goa’s share in the tax-pool of the central government has sharply risen since 2014-15 and that has emerged as the single most important factor in the financial turnaround of the State.
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The estimated share in central taxes for Goa for the year 2017-18 stands at Rs 2,551 crore, which is huge compared to just Rs 900.6 crore it earned just three years back in 2014-15. In short, a crucial source of income has more than doubled in just three years, which has acted as a breather for the State government.
This growth is on two counts. Starting from 2015-16, the central government has decided to devolve 10% more of the central funds to states. Besides, Goa government had also managed to convince the central government to increase its share in divisible pool from 0.266 to 0.378 percentage points.
While, share in central taxes has increased, but at the same time, it is worrisome that Goa’s own tax revenue is growing at a very slugging pace. The estimated tax revenue of Goa in 2017-18 is Rs 4800.4 crore, which is an average annual growth rate of just 7.2% since 2014-15.
But, that’s not the end of it, as the State has consistently failed to reach its target of tax revenue. Consider this: The budgeted estimate for tax revenue for 2016-17 was Rs 4916.4 crore, which has now been revised downwards to Rs 4,445.73 crore.
Similarly, the budgeted estimate for tax revenue for 2015-16 had stood at Rs 4,286.5 crore, which was revised to Rs 4,033.7 crore later. But, when actuals for 2015-16 were revealed during this budget, the tax revenue slipped further to Rs 3,976.4 crore.
It’s always difficult to grow the tax-base. In the last budget, the then chief minister, Laxmikant Parsekar, had increased taxes on automobiles and tourism. But, the conventional wisdom says that it is better to lower taxes so that more people pay, which ultimately boosts tax revenue. This is because higher tax rates de-incentivise paying taxes.
Chief Minister, Manohar Parrikar, has resorted to conventional wisdom by bringing down taxes on automobiles in his 2017-18 budget.
Meanwhile, the state has increased thrust on capital outlay, which means spending on bridges, roads, hospitals and other infrastructure. Parrikar announced a capital outlay of Rs 4,286.25 crore for 2017-18, which is 37.7% more than Rs 3,112.56 crore capital outlay for 2016-17.
Interestingly, the State’s debt to gross state domestic product (GSDP) ratio has more or less remained stable in the last few years. This means that huge capital outlay hasn’t required state to excessively borrow, which is good.
The estimated debt to GSDP ratio stands at 24.95% in March 2017 compared to 25.21% in March 2016 and 24.45% in March 2015.
