It's time for the State to improve its tax administration
The Comptroller-and-Auditor-General's (CAG) report for 2015-16 clearly highlights that Goa's own tax revenue grew at a really low rate during the year. For any State, this is a major concern, as a State mobilises its revenue through taxes and the fact that Goa's tax revenue grew by a partly 2% in 2015-16 doesn't paint an encouraging picture of State's finances.
As per the CAG report, Goa's own tax revenue increased from Rs 3,896 crore in 2014-15 to Rs 3,975 crore in 2015-16 translating to a growth of just 2%. At a time when State's tax revenue grew at a negligible rate, Goa's share in central government's taxes and duties grew by a whopping 113.5% to reach Rs 1,023 crore in 2015-16.
This means that Goa's dependence on central government's funds increased in 2015-16. Per se, it is not much of a problem, but a State must always grow its own tax base so that it is more self-sufficient.
Having said that, one must acknowledge that growing own tax revenue is easier said than done. For this, the State will have to tighten its tax administration so that leakages can be prevented. Those not paying taxes should be penalised. More than anything else, the entire system to collect taxes should be improved.
There are a number of hawkers everywhere in Goa, who don't pay any taxes. In the beach belt, the shops outside (which pay taxes), there are hawkers, who more often than not don't pay any taxes.
The fact is that large number of traders in any part of India are totally unregulated and outside the ambit of law. Given that, Goa is a much smaller State than other parts of India, such elements, who are avoiding taxes, should be taken to task.
To that extent, Goods-and-Services-Tax (GST) is a positive move because it will compel businesses to pay taxes or else they will not be able to get input tax credit. If they are unable to get tax-credit, they will charge a higher price to their customers ultimately affecting their own business. This will ensure that tax compliance is better under GST regime.
At the same time, industry should be encouraged. If industries do well in Goa, State's tax-base will only grow. In the last two years, the State government has made attempts for attracting industries, which are on the right track.
However, the government must ensure that all the departments give approvals to cleared projects at a fast pace so that these projects translate into reality and start providing jobs to locals and get tax revenue to the exchequer.
