Call to widen civic body tax base

THIRUVANANTHAPURAM: Political parties have called for not just an expansion of the tax net of the local bodies in the state but also their periodic revision every five years.

The suggestions were aired during an interaction organised by the Fifth Finance Commission with political parties in the state on Saturday. All national and regional parties in the state took part in the interaction.

“Many party representatives were of the opinion that professionals and traders who are now out of the tax net should be brought in,” said Dr B. A. Prakash, chairman of the commission.

The growth in the revenue of local self-government institutions (LSGIs) has demonstrated a negative trend between 2009-10 and 2013-14, the latest CAG report had revealed.

It was stated that if the performance of all 1,209 local bodies in the state were considered, the unrealised tax amount would have easily crossed Rs 300 crore.

Tax revenue of local bodies consists of property tax, profession tax, entertainment tax and advertisement tax. Property tax is a recurring tax levied by grama panchayats and urban local bodies on buildings and land attached to it. It constitutes more than 50 per cent of the total tax revenue of local bodies.

Dr Prakash said political parties also objected to the new system where local bodies were treated like any other government department.

The local body funds, which were deposited in the accounts of each local body, have now been kept in a revenue account like any other government department.

This means that the local bodies will cease to get funds as smoothly as they used to, that their funds too will be subject to certain Treasury curbs.

“This works against the autonomy of local bodies. They should be treated like an autonomous state, not like a department,” Dr Prakash said.