Karnataka budget taxes rich, middle class but spares poor

Bengaluru, March 18: The Karnataka budget for 2016-17 hikes tax on petrol, diesel, beer, liquor and soft drinks, but spares the poor with exemption in cess on foodgrains and pulses.

There would also be lower value added tax (VAT) on cotton, chatnipudi (curry powders), utensils, LED (light-emitting diode) bulbs and helmets, said Chief Minister Siddaramaiah, presenting the budget in the assembly on Friday.

Petrol price would go up by Rs.1.89 per litre from April 1, with increase in tax from 26 percent to 30 percent, he told the assembly, presenting the budget.

"Similarly, diesel price will be up 89 paise per litre with increase in tax to 19 percent from 16.65 percent," Siddaramaiah, who holds the finance portfolio, said in his over two-hour long budget speech in Kannada.

Justifying the increase on fuel taxes, the chief minister said though the central government had increased excise duty thrice on petrol and diesel during the current fiscal (2015-16) despite steady fall in crude oil prices in the international market, the state government did not raise its tax on them.

Doubling excise duty on beer to Rs.10 from Rs.5 and increasing the same by Rs.5 on Indian made liquor (IML) to Rs.50 from Rs.45, the chief minister has also hiked additional excise duty on liquor by four percent to 12 percent across all the 17 slabs.

"I propose to increase additional excise duty on beer to 150 percent from 135 percent and levy an administrative fee of Rs.2 per litre on export and Re.1 per litre on import of spirit, excluding ethanol," Siddaramaiah said in his fourth consecutive budget presentation as the ruling Congress chief minister.

To mobilise additional resource, the budget has increased VAT to 20 percent from 14.5 percent on aerated and carbonated non-alcoholic beverages, including soft drinks and soft drinks concentrates.

The budget, however, fully exempted paddy, rice, wheat, their flour, pulses, ragi (malt) rice and jowar roti (bread) from 14.5 percent VAT for one more year.

"As part of tax relief I propose exempt VAT on jowar roti, a native food in the state's northern region, and ragi roti, a staple food in the state's southern part," Siddaramaiah said.

Full VAT relief is also given on aluminium utensils other than pressure cookers and cutlery for the benefit of poor and handmade paper and paper boards as an eco-friendly measure.

VAT on a cotton variety has been reduced to two percent from five percent to fulfill the demand of its traders.

"I proposed to reduce VAT to 5.5 percent from 14.5 percent on chatnipudi (curry powders) prepared from groundnut, niger seeds, copra (coconut), Bengal gram, garlic, flax seeds and fried gram, which are part of north Karnataka dish," Siddaramaiah said amid thumping of desk by the ruling party members.

VAT has been reduced to 5.5 percent on office files, adult diapers to help senior citizens, helmets, LED bulbs as electricity saving measure, surgical gowns, masks, caps and drapes of non-woven fabrics, set-top-boxes for viewing television content and multimedia speakers.

The budget, however, seeks to increase motor vehicle tax on transport vehicles to mobilise Rs.121 crore additional revenue next fiscal.

"As the motor vehicle taxes have not been revised since 2010, I propose to enhance taxes on private stage carriage to Rs.900 from Rs.600 per seat, on private city service stage carriage to Rs.450 from Rs.300 per seat, on contract carriages to Rs.1,500 from Rs.1,000 per seat," Siddaramaiah noted.

Vehicle tax on all India tourist omni buses has been increased to Rs.3.500 from Rs.2.750 per seat and tax on stage carriages operating on special permit to Rs.1,500 to Rs.1,000 per seat.

"As transport and non-transport electric vehicles are eco-friendly, I propose to exempt them fully from taxes," Siddaramaiah added.

The budget has increased entertainment tax from six percent to 10 percent collected from multi-system operators and direct-to-home service providers.

IANS