In a proposal that will pinch the pockets of Punjab’s rich MLAs, the cash-starved Congress government has decided that it can no more foot their income tax bill.

First mooted by the finance department in October last year, the move was endorsed by chief minister Captain Amarinder Singh during a meeting of the cabinet sub-committee on fiscal management on Monday.

Of the 117 Punjab lawmakers, 95 (81%) are crorepatis, according to a report from the Association for Democratic Reforms (ADR), an independent outfit promoting transparency. Yet in percentage terms, the present House has 7% fewer crorepatis than the previous assembly.

Since the move may find little favour with MLAs, including those in and not in the ‘millionaire club’, finance minister Manpreet Singh Badal has got the CM to back it. Interestingly, it was Amarinder who had allowed the largesse to MLAs during his previous stint as chief minister (2002-07) through a notification in 2004.

Like most of Manpreet’s austerity measures, its high on symbolism. Doing away with the sop will help the state save Rs 11.08 crore annually. Of this, Rs 10.72 crore was for payment of income tax of MLAs and the remaining for ministers.

  • As per the Punjab government website, Punjab MLAs draw monthly salary and fixed allowance of Rs 84,000 and another Rs 30,000 for petrol/diesel. In addition, they avail travelling and daily allowance (TA/DA), with some MLAs claiming even up to Rs 1 lakh a month.
  • Most Punjab MLAs also own farm land and income from agriculture, too, is exempt from tax. Many also avail power subsidy for running tubewells and subsidy for diversifying to horticulture crops such as kinnow. A few of them also have a stake in the state’s transport, liquor and mining business.

“In view of the severe financial constraints faced by the government, the CM suggested that all elected representatives in the state, including ministers and MLAs, should pay their own income taxes. Currently being paid by the government, these taxes are draining the exchequer of the much needed funds. Punjab was possibly the only state in the country to follow the system of government paying taxes for all ministers and MLAs,” an official spokesperson stated after the meeting.

The Members of Parliament (MP) pay their own income tax, so do MLAs in a many states.

But the proposal is iffy. The spokesperson added that the suggestion, “if implemented”, would lead to saving of this entire amount, which the state could then use for various important development works and implementation of welfare schemes, many of which are facing serious hurdles due to paucity of funds.

The CM’s moral call to MLAs to give up power subsidy had failed to evoke a response. Amid much posturing on the issue between ruling and opposition benches during the budget session in June last year, it fell off the radar. Amarinder had made a personal appeal during the session by declaring to give up his own subsidy and appealing to party colleagues and rich farmers too to do so.

The 2004 tax exemption to MLAs was challenged in the Punjab and Haryana high court, but was dismissed as the state government submitted that it was footing the income tax bill with no loss to the income tax department.

RTI activist HC Arora, who had petitioned against the tax exemption to Punjab MLAs before the assembly speaker during the previous House, said the symbolism is needed. “As elected reprentatives of the people, MLAs cannot be made to feel superior to those who elect them.The government does not bear tax burden of anyone occupying public positions, then why MLAs?” he said.

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