Resource Mobilisation Strategy for Indian States

Contents: Preface. 1. Introduction. 2. Government revenue and state taxes in Rajasthan. 3. Government revenue and tax policy--a conceptual framework. 4. The work programme. 5. Sales tax--a problem of tax evasion and eroding tax base. 6. Taxes on vehicles--a problem of inefficient services and poor databases. 7. Stamp duty and registration fee-a problem of tax avoidance. 8. State excise--a problem of conflicting objectives. 9. Luxury tax on hotels--a problem of inadequate taxation. 10. Entertainment tax on cinema--a problem of distrusting the market. 11. New taxes--professional tax. 12. A summary of the recommendations and likely benefits. Post script. References. Appendices: 1. Key data on Rajasthan's state finance. 2. Key data on Rajasthan's revenue receipts. 3. Seminar on "Mobilisation of resources for the state of Rajasthan" organised at HCM-RIPA June 3-4, 1998. 4. List of Government documents consulted. 5. Interview schedule. 6. List of persons interviewed. 7. North zone consensus on floor rates of sales tax. 8. Selected comparative revenue data. 9. Contract system and revenue from Octroi. 10. Revenue from check-posts. 11. A list of tax exemptions under RST. 12. New tax structure of taxes on vehicles. 13. Main recommendations of the Committee of State Finance Ministers on stamp duty reforms. 14. The amnesty scheme of Maharashtra--orders containing text of the scheme. 15. The amnesty scheme proposed for Rajasthan to widen the tax base of stamp duty. 16. Some observations and suggestions on the draft Rajasthan Stamp Bill, 1998. 17. CARD. 18. Fee for beer bar licences in different states. 18. Field survey report--cinema.

"Ever since the Government of India initiated the process of economic reforms in 1991, financial difficulties of the Indian states have been on the increase. Today, most of the states face a resource crunch that is set to become more acute with every passing year. Large and persistent budget deficits and the fast-growing debt burden are threatening their financial autonomy.

Against this scenario, these states are frantically looking for new ways of working, cutting down costs and augmenting their revenue income. Coming out in an hour of need, this book suggests how Indian states can effectively mobilise additional resources and avoid falling into a debt trap. As the possibilities of new taxation are very limited, it focuses on generating additional revenue by controlling tax evasion and tax avoidance. Concrete examples are given to show that state tax revenue can be increased without a corresponding increase in the tax burden.

This book is useful not only for the taxman and managers of state finances across the country, but also for students, teachers, researchers and the entire thinking community interested in the financial affairs of the Indian states. It also aims at educating public opinion for better tax compliance and more productive and efficient use of public debt." (jacket)