FM Dr TM Thomas Isaac rules out budget sops

Thiruvananthapuram: Demonstrating that he is sworn to fiscal consolidation, finance minister Dr T.M. Thomas Isaac refused to entertain any tax tweaks or policy changes in the Budget that he had presented on February 2. 

Dr Isaac, while taking part in the discussion on the Budget in the Assembly on Wednesday, brushed aside demands for a roll back of an increase in land tax, an increase in the allocation for the rubber price stabilisation fund, and a reduction in the sales tax on petrol. He even asked profit-making PSUs to source their own loans rather than depend on the government to take loans for them. It is usual for finance ministers to announce major reliefs towards the end of the Budget discussion.

Some minor changes, like the exemption of arecanut farmers from tax burden, Dr Isaac said could be discussed at the Subject Committee meetings. The opposition members, especially K M Mani and P C George, had criticised Isaac for restoring the land tax announced and then revoked by the UDF in 2014. “Then, it was Isaac who was the most vehement critic of the increase in land tax. And we withdrew the decision following public protest,” Mr Mani said.

Isaac conceded that he had questioned the move in 2014 but said the situation was different this time. “The money mobilised from the increase in basic land tax (Isaac expects Rs 100 crore) will be pumped back into the welfare boards of agricultural labourers and farmers,” Isaac said. “In fact, farmers themselves had agreed to the increase when they realised that the money will come back to them,” the minister said.

The demand for increasing the allocation for the rubber price stabilisation fund was raised by both UDF and LDF members. However, Isaac argued that the Budget had earmarked Rs 500 crore for the fund, higher than what the UDF had allocated for the fund. He also flatly refused to reduce the sales tax on petrol saying such a move was just a knee-jerk reaction.

Many members had reservations about the guidelines laid down for weeding out non-deserving beneficiaries from the social welfare pension list. Isaac said that Gulati Institute of Finance and Taxation had been asked to study and submit a report on ways to keep out the undeserving from getting social welfare pensions. 

“We will rework the guidelines after the GIFT study,” he assured the House. Isaac said that the CAG report had revealed that the undeserving constituted 16 percent of the beneficiaries, and that 12 percent of the deserving were kept out.