LARGE TAX BASE - Taxes chip in over 10% to GSDP in TamilNadu
B Sivakumar
Chennai
Tamil Nadu is as one of the most-taxed states and this was validated on Monday when the commercial taxes department said that 10.07% of the states gross state domestic product (GSDP) came from (GSDP) came from state taxes, second only to Karnataka which earned 10.78%.
The tax proportion in Tamil Nadu's GSDP has gone up from 5.21% to 10.07% in the last four years. Main reason for higher percentage of tax in GSDP is the larger tax base in the state. Being a manufacturing state, the tax base is large and due to this the revenue is also high compared to other states, said Madras School of Economics professor K R Shanmugam. Successive state governments have used the larger tax base to maximise revenue. About 45% of the state taxes come from value added taxes (VAT).
Tamil Nadu is also seen as efficient in tax collection and enforcement. Though Maharashtra is also a manufacturing state, the proportion of its state tax in GSDP is only 7.27%. It explains Tamil Nadu tax departments efficiency, said Shanmugam. Since the tax rates are already high, the state can increase tax revenue in future only be increasing the tax base,said Shanmugam.
