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State government should not make Goans pay higher taxes

There has been a huge shortfall in revenue collection of the Goa government since the state came under nationwide lockdown in view of the coronavirus pandemic, according to Chief Minister Pramod Sawant. He configures the fall at an alarming 80 per cent during the last two months. It is true that all sectors of the state economy have taken a hit in the lockdown, be it manufacturing, services, wholesale or retail, large, medium or small. The tourism sector, one of the mainstays of Goan economy, has come to a standstill. With little money at their disposal following loss of jobs or pay cuts in view of lockdown and uncertainty over return of normalcy, people are adopting austerity measures, as a result of which spending is less, which in turn has caused a drastic fall in collection of goods and service tax (GST) and value added tax (VAT). Even before the coronavirus hit the state, the state government had been frequently borrowing from the market to meet its financial needs. Now it faces a major financial crisis owing to the shutdown of businesses in the lockdown and the resultant loss of revenue.

The state government has pressed the panic button. It has raised VAT on petrol and diesel prices, making fuel costlier. With various curbs on movement many people prefer not to venture out, as a result of which fuel consumption has fallen. It is hard to say to what extent increased VAT will help the government mobilize resources. The government has also raised taxes on liquor and hotels. Again it is hard to say how much the government can hope to mobilize on this score in view of bars and restaurants being shut. The government also raised power and water tariffs but had to roll them back in view of mounting criticism from all sectors. It was surprising to note that the government chose to hike water and power tariffs to get more revenue at a time when people were reeling under the impact of lockdown due to coronavirus pandemic and had even lesser money in hand to meet their daily expenses.  

Obviously owing to the financial crisis it faces, the state government has not been announced any major scheme to help the people who have been terribly affected by the prolonged lockdown as they have lost business incomes and jobs. Rather than giving a helping hand to the suffering people, the government chose to give them a double whammy by announcing hikes in taxes. Raising taxes and tariffs at this juncture are unwise moves as they would not only antagonise hapless people but also not help generate the desired revenue as most people have no money at their disposal. The prices of various commodities have risen during the lockdown, which has further eroded the pockets of the common man. The government should adopt austerity measures to tide over the situation rather than taking unpopular decisions.  All the ongoing developmental works that can be delayed should be stopped and only those that are necessary should be completed on time for public convenience. Rather than choosing to burden its citizens and depriving them of their hard-earned money, the state should seek a financial package from the Centre to tide over the precarious economic situation and help its citizens.

With health experts warning that the coronavirus is to stay for a long time, the state government has to make a balanced plan to contain the virus and restart economic activities. The unprecedented situation needs extraordinary measures, help for which can be sought from the Centre. The state government needs to seek at least Rs 3,000-crore grant in aid so as to put the state economy back on rail by reviving various economic activities, particularly the tourism sector, which has taken the fiercest blow from the coronavirus pandemic. Levying more taxes on Goans at this juncture will drive them to greater misery and should be avoided. Since the Centre has announced a huge package of Rs 20 lakh crore to tide over the situation emerging out of coronavirus pandemic, the Sawant government should seek Goa’s slice of this central cake to help Goans rather than putting them to more hardship by making them pay higher taxes.

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