Resource Mobilisation Committee for higher user charges for govt. services, auction-based digital licensing for excise

According to the Resource Mobilization Committee (RMC) report, low non-tax revenue, especially from user charges and state assets, remains a major challenge in strengthening the State’s fiscal health and sustainable economic growth.

The committee, headed by retired IAS officer KP Krishnan, on Thursday submitted the report to Chief Minister Siddaramaiah, who also holds the Finance portfolio, recommending reforms in tax structures to broaden the tax base and reduce over-reliance on a few major sources of revenue such as commercial tax, excise, motor vehicles and stamps and registrations.

Low non-tax revenue remains a major challenge in mobilizing fiscal resources, the report said. Non-tax revenue is collected from user fees on state-run hospitals, irrigation, drinking water, educational institutions, public transport and electricity supply.

Earlier, the Financial Management Review Committee, chaired by the Secretary-General, had recommended remedial measures such as regular review of user fees to check the decline in growth in non-tax revenues.

moderate increase

According to the Medium Term Fiscal Plan (MTFP)-2025, the State’s non-tax revenue increased moderately from ₹13,117 crore in 2023-24 to ₹14,500 crore in 2024-25. The projected non-tax revenue (Budget estimate) in 2025-26 is pegged at 16,500 crore.

In August 2024, the government formed a committee to explore various resource mobilization options, including asset monetization. He said significant opportunities in renting and making money have not yet been exploited. However, MTFP noted that non-tax revenue as a percentage of GSDP and as a percentage of its own tax revenues has remained stable over the past few years.

The committee noted that Karnataka continues to show strong economic growth, outperforming many states in India. The state’s own tax revenue continued to form the backbone, accounting for approximately 60-70% of total revenues, with significant contributions from business taxes, consumption taxes and motor vehicle taxes.

The need for better asset data management and systematic survey of state properties was another major challenge for the State. “Outdated guideline values ​​and inadequate property tax revisions” are another challenge, the report said.

It recommended introducing auction-based digital licensing for consumption tax, focusing on transparency and efficiency, rationalizing and increasing user fees in public services, moving to volumetric billing with strong regulatory support, and automatically indexing user fees to inflation.

asset assessment

The committee also recommended that the Finance Department “unlock revenue potential through scientific asset valuation, expansion of leasing under public-private partnerships and monetization of urban land assets.” It also recommended conducting periodic property surveys and creating an economic policy wing within the Finance Department to monitor non-tax revenues and income from assets.

The report underlined the need to protect growth-enhancing spending in infrastructure, education and health while improving spending efficiency.

He also called for systematic reforms in revenue mobilization to sustain Karnataka’s fiscal soundness and inclusive growth trajectory.