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Odisha bats for ‘green tax’ on mining

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OST Bureau

Bhubaneswar, Sep 19:

Even though the ‘consuming’ states had earlier turned down the proposal of Odisha government for imposition of green tax on mining, the government once again pitched the issue before the empowered committee of state finance ministers on Goods & Service Tax (GST), which met at New Delhi today.

“There should be a provision in the Central act for levy of green tax on production of mineral. Since mineral production pollutes the environment of mineral bearing states, the money to be collected from the green tax will be utilized for the environment protection,” said Odisha Finance minister Prasanna Acharya in the meeting.

Under GST, the destination principle applies and the mineral producing state which gets affected by pollution does not get any part of tax revenue. Ironically, it is the consuming state that gets the tax revenue whereas what the people of the producing state get is pollution, the minister said.

Besides the green tax, the Odisha government had reiterated its demand of keeping entry tax out of the purview of Goods & Service Tax (GST). The state government had categorically stated that it would not roll out GST if the entry tax is not kept out of the purview of GST.

The state government earns around Rs 1,400 crore annually by way of entry tax and it was not in favour of the entry tax being subsumed under GST.

He also demanded the Centre to compensate the states for the losses they are suffering on account of reduction in CST rates.

The Centre brought down the rate of CST from 4 to 3% in April, 2007, and reduced it further to 2% in June 2008, in order to gradually phase out CST (which is not compatible with VAT) and introduce Goods and Services Tax (GST) from April 2010. The Centre had agreed to compensate the states for CST loss and did the same from 2007-08 to 2009-10. It also compensated for 2010-11 but after deducting notional gain calculated on the basis in hike in VAT rate from 4 to 5%, but stopped it in 2011-12.

Odisha had suffered an estimated loss of Rs 184.03 crore in 2007-08, Rs 483.29 crore in 2008-09, Rs 554.07 crore in 2009-10 and Rs 664.39 crore in 2010-11. In 2012-13, the loss is expected to be about Rs 1500 crore, sources said.

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