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Punjab hikes ST on petrol
P. P. S. Gill
Tribune News Service

Chandigarh, July 16
Beginning tomorrow, petrol will cost more in Punjab following the Cabinet decision today to hike sales tax on it from 20 per cent to 25 per cent, which will mean an additional annual revenue of Rs 65 crore on the existing Rs 350 crore.

The additional excise duty on textiles, sugar and tobacco stands abolished and replaced by sales tax of 4 per cent each on these three items to fetch a revenue of Rs 55 crore per annum. Likewise, sales tax at the rate of 50 per cent of the ordinary tax has been levied on all items sold through the defence services canteens to shore up Rs 50 crore per year.

The Cabinet has also decided to introduce exim forms from September 1, which will generate an additional revenue of Rs 100 crore. The state has also decided to restrict the benefit of sales tax exemption to the value of goods sold by an exempted unit, which would mean an additional annual inflow of Rs 40 crore.

Punjab has also decided to impose sales tax of 12 per cent, against 4 per cent at present, on all lubricants to raise an additional income of Rs 20 crore.

The Cabinet has also decided to introduce value added tax (VAT) effective April 1, 2004, as also plug leakages in tax evasion through a series of anti-tax measures. It is estimated that Punjab loses Rs 2,000 crore to Rs 2,500 crore per annum because of evasion of sales tax.

These decisions are aimed at fiscal stability and implementation of economic reforms. As a result, the sales tax revenue collections are expected to net Rs 3,575 crore at the end of the financial year against Rs 3071 crore last year.

The Cabinet meeting lasted over three hours where poor collection of sales tax came under attack from all sides. There was also opposition to most of the proposals aimed at additional resource mobilisation but the Chief Minister is reported to have taken a firm stand in the larger interest of the state’s economy, sources said.

On the employees’ front, the state decided to abolish non-practicing allowance (NPA) for civil and veterinary doctors to effect a saving of Rs 60 crore annually. The other decision pertained to the commutation of pension. The Cabinet decided to increase the rate of interest on this from 4.75 per cent to 8 per cent. This would mean that the present out go will come down from Rs 180 crore to Rs 120 crore per year and there would be a tie-up with banks.

The Cabinet also imposed a maximum ceiling on subsidy to be given on house building and motor vehicle loans to employees. For loans up to Rs 2.5 lakh, the maximum subsidy will be 2.5 per cent and 1.5 per cent on loans beyond that sum with a tie-up with the banks. The Cabinet decided to continue with the ban on new recruitment.

Similarly, for pensioners, a new system of ‘’contributory pension’’ is being introduced and for which new rules will be made within six weeks. It was also decided to activate the central surplus staff pool of nearly 50,000 employees.

Another important decision taken in principle was to hand over 18 polytechnic and 94 industrial training institutes to the private sector under a licence system.

The Cabinet after resistance put up by the Minister of PWD decided to constitute a Cabinet sub-committee, headed by the Finance Minister, on the institution of Punjab Infrastructure Regulatory Authority.

It was also decided to pay more attention to power sector reforms and the transport sector.

The Cabinet approved a memorandum of understanding to be signed on the Medium Term Fiscal Programme between the Punjab Government and the Union Government on July 23. It is aimed at the stabilisation of the fiscal situation over a period of time.

It is, perhaps, for the first time ever that so many important decisions have been taken by the Cabinet in one go.

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