Kerala is facing a public debt exceeding Rs 5 lakh crore, with the new UDF government set to present its first Budget on June 19. Dr. Biju Jacob, a seasoned public finance expert, has suggested a strategy to enhance state revenues without imposing fresh taxes or increasing fees. He emphasized the importance of capturing taxes that are rightfully owed to the state to address the current revenue challenges.
Dr. Jacob highlighted the need for Kerala to focus on fully collecting taxes that are legally due, rather than introducing new taxes. He pointed out that the state’s revenue sources are sufficient, but the issue lies in the ineffective collection of taxes. The proposal aims to provide a significant roadmap for Chief Minister V.D. Satheesan, who faces the task of balancing welfare commitments with fiscal responsibility.
The fiscal white paper released by the government has painted a concerning picture of Kerala’s finances, setting the stage for the government to consider alternative revenue generation strategies. Dr. Jacob proposed conducting a technology-driven Information System Audit of the commercial taxes department to identify and recover substantial revenue leakages. By addressing tax evasion and improving tax collection mechanisms, Kerala could potentially strengthen its state exchequer significantly.
The expert’s recommendation comes at a time when the government is under pressure to implement structural economic reforms while meeting public expectations for welfare initiatives. Dr. Jacob emphasized the importance of plugging tax leakages, particularly in commercial taxes and GST-related transactions, to bolster the state’s revenue streams. His proposal focuses on leveraging existing tax systems and conducting thorough audits to identify and recover lost revenue.
As Kerala grapples with financial challenges and seeks fiscal stability, Dr. Jacob’s proposal offers a pragmatic approach to enhancing state revenues without burdening citizens with additional taxes. By prioritizing the effective collection of taxes already due, the state could potentially unlock hidden revenue within its tax system, providing a viable solution to its fiscal woes.
