Goa may not benefit from uniform tax policy

| 12 January 2000 17:52 IST

Rather than benefiting, Goa may lose revenue on the count of the uniform sales tax policy in spite of the fact that the existing tax structure is much below average in the tourist state here.

The reason is simple. Hardly anything is manufactured in Goa and most of the things are imported from other states. While all the states would have a uniform sales tax, products imported in Goa would cost more due to charging of additional four per cent central sales tax.

This could obviously result into a new trend of people crossing the borders for marketing in Maharashtra or Karnataka, which may upset Goan market tremendously. Local authorities also fear setting of a new trend of smuggling a few products.

It is not a fact that most of the household goods or those needed in the hotel and other sectors of tourism industry are not at all manufactured here. But most of such industries, which have come up in last one decade, already enjoy 15-year sales tax holiday. The revenue would thus start coming only after the holiday period ends.

Amidst protests which have begun in several states over implementation of the uniform tax policy from 15 January, it has to be seen what decision the coalition government led by Francisco Sardinha takes. The sales tax department however is fully geared up for the implementation.

Though Sardinha had recently announced that the sales tax holiday would be applicable for all the industries beginning production by March this year, decision of the standing committee of state finance ministers has changed the whole formula. It would thus apply to all the industries from 1 January itself.

Only those exempted from this are the industries in pipeline, provided they are registered, allotted land for the industry, applied for finance and would start production within two years. The committee has proposed to re-examine the income tax holiday proposal, under which Goa is also covered.

At the face value however it appears that the liquor industry may benefit marginally as only the country liquor like cashew and coconut fenny would now cost more since the tax would go up from eight to 20 per cent. Rest of the liquor already pays 20 per cent sales tax, which is also the slab it covers in the uniform tax policy.

But the new policy is expected to hit the tourists as well as local Goans as most of the eatable products are now either brought under the tax cover or in the higher slab than the existing ones. Secondly, those which may not be specified in the list would also attract minimum four per cent sales tax as per the new policy.

Items ranging from processed fish, meat, vegetables, kerosene, cumin seed, slice bread, chillies, turmeric, tamarind, garlic, ginger and even ice no more remain tax-free but would be charged at four per cent. Cooking gas, tea, coffee and even cooked food would now be charged at minimum eight per cent unlike varying less taxes in the past.

Cashew nuts, another Goan speciality popular among tourists, would also cost dearly as the taxes have been hiked here in four folds. Computers, which attracted hardly half a per cent tax till date, would also be a costly affair due to eight per cent tax slab it is being brought under.

Like cheap liquor, Goa is also known for cheapest motor vehicles as the sales tax here was hardly four per cent. It thus attracted equally large number of customers from the neighbouring states, by contributing around Rs 6 to 8 crores to the state treasury. But bringing it on par with other states by charging 12 per cent, it will have to lose the additional market.

Goa's 50 per cent sales tax revenue however comes from all kind of petroleum products, ranging between the tax structure of eight to 17 per cent. It would add the treasury now with all such products, except diesel, as it is being charged 20 per cent floor rate. The state however has no plans to reduce existing 17 per cent tax on diesel, though it is now added in the category of 12 per cent.

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