The Cabinet on Wednesday permitted local bodies to levy 15% of the construction cost of houses with a floor area of 3,000 square feet and above as additional tax.
The extra fee will be uniform for homes, regardless of the type of flooring used in construction. The government has also brought houses with a floor area of more than 540 square feet under the property tax net.
The State Finance Commission (SFC) had, in its second report, suggested the supplemental tariff, among other measures, to empower local bodies to mobilise additional resources for infrastructure creation. The Cabinet had accepted the recommendations with minor modifications.
Entertainment tax
The government would amend the Kerala Local Authorities Entertainments Tax Act, 1961, to expand the amusement tax scope. The Cabinet has proposed a 10% increase in entertainment tax. It urged local bodies to employ the latest software to plug the holes in the local tax collection system. It also recommended creating a local body-level Geographical Information System to enhance tax revenue.
The local bodies should embrace e-services for tax collection and public service delivery. They should promote e-payment of tax and other levies and publish tax particulars on a website to ensure transparency and public accountability.
Advertisement tax
The local bodies would henceforth levy up to 10% tax on roadside advertisement hoarding, with a tax exemption for start-ups and Scheduled Caste and Scheduled Tribes.
The SFC report emphasises authorising local bodies to raise funds for development from the open financial market. The Cabinet will operationalise the Kerala Local Authorities Loans Act, 1963, to authorise local bodies to issue revenue bonds for fund mobilisation.
Land relinquishment
The government will expedite the formation of the Kerala Local Government Development Fund. It will amend the Kerala Land Relinquishment Act to enable citizens to hand over their property to the government sans red tape.
The local bodies could utilise the land for public purposes. The government would conduct a land donation campaign. It would increase the corpus of the local bodies’ disaster relief fund incrementally.
The local bodies could partner with the private sector in specific sectors, including tourism.
The Cabinet asked local bodies to increase the rolling revenue (gross revenues of the borrower for the current month plus the two previous months) and form a special team at the local body headquarters to address the grievances of taxpayers.
The local bodies would update and digitalise land tax and ownership registers. They should annually revise land and home tax. Local bodies should review the tax exemption granted to specific structures. They should revise the rental for mobile phone towers.
The government will amend the Kerala Municipality Act to ensure better tax collection.
