Non-GST tax revenue has let down Tamil Nadu government in 2017-18. When the GST revenue has increased as per the state government’s claim, non-GST revenue like VAT on fuel and liquor fell short of the target. Against a target of Rs 73,959 crore VAT, only Rs 46,454 crore (63%) could be collected during the past fiscal.
Another area of concern is poor land revenue and excise duty collection. As a result, the overall revenue fell short of the target by Rs 6,000 crore,show data put out by the Comptroller and Auditor General (CAG) at the end of March 2018.
Officials said what let down the government is poor liquor sales.There is no short falling VAT on petroleum products, but VAT on liquor sales was low. The slide in sales tax collection from liquor trade started in August last year. While the total sales tax collection was Rs 5,480 crore in July, it fell to Rs 3,115 crore in August. Since then, it did not pick up. “After the Supreme Court order on closure of liquor shops on highways, we had to close several hundred shops across the state.Despite the apex court revising its order allowing shops on highways, not all shops could be reopened due to massive protests from the public,” said a senior Tasmac official.
Tamil Nadu ended the first year of GST roll out with a total collection of Rs 27,707 crore. There is no target or comparison for this figure in the CAG data as the tax was collected under a new head. Yet, it was higher than the VAT collected on items other than petroleum and liquor the previous year, said a state government official.
“When GST was rolled out, many felt governments like Uttar Pradesh and Bihar, where the consumption is high, will get more revenue. But as the months went by after GST was rolled out, we found that apart from being a consumption state, the state must also have the financial power to purchase things and services. Tamil Nadu being strong in these areas, the GST revenue was about 15% more than the comparable VAT revenue for the previous year,” said a senior commercial tax official.
Tamil Nadu government has to reduce its dependence on sale of liquor to boost its revenue and make it more sustainable in the long run. If more industries are setup,the economy will grow and tax revenue will shore up.