ODISHA CM PLANS TO LEVY OF MINERAL RESOURCES RENT TAX

ODISHA CM PLANS TO LEVY OF MINERAL RESOURCES RENT TAX 26/12/2011
ODISHA NEWS:

Chief minister Naveen Patnaik once again urged Prime Minister Manmohan Singh to take necessary steps for levy of Mineral Resources Rent Tax on iron ore.
Expressing resentment over the gross apathy of the Centre towards his proposal, Patnaik in his second letter to the prime minister, sought to know the reasons of no response.


Since 2003, the state government has been collecting forest development tax (FDT) on kendu leaf, timber and bamboo as an attempt to make up for the loss on sales tax on the forest produce, particularly kendu leaf in which Orissa is a leading producer.

A note from the state steel and mines department to the forest and environment department last week said that FDT can be levied on the basis of the sale value of minerals fixed by the Indian Bureau of Mines. Though IBM sale value for iron, chrome and manganese is available, the same for bauxite and many other minerals are not available and a mechanism will have to be devised for assessing the sale of value.

The note, however, cautioned that mine lessees may show forest produce coming from a non-forest area as FDT will be levied. “Therefore, it may be necessary to develop a mechanism by the forest and environment department to identify the produce which is from the forest area,” the note said. It added that the view of law department needs to be taken as royalty on mineral is collected under MMDR Act. “As per provisions under section 2 of the Act, levy of taxes on minerals by the state is not permissible.”


Asserting that the proposal of the state government would not affect mining activities, he said that the intention is to impose tax on surplus rent and thus allow the mining companies to make profits that are commensurate with the risks involved.


Defending the state’s proposal, he said that besides giving additional resources to the areas affected by mining, the tax will act as a deterrent to excessive mining.
Clarifying the intention of the state government, he said that the proposed tax so collected should accrue to the state government for improving social and physical infrastructure, strengthening welfare measures to improve the livelihood of the poor people of the state.


Stating that the issues raised are of vital importance to the state, the chief minister said earlier last week, that the State Cabinet had expressed grave concern and after due deliberation a resolution was adopted on the issue which was also sent to the Centre for taking necessary steps.


Stating that he had been raising the issue in various forums such as at the National Integration Council and the National Development Council earlier this year, he said that he is unable to understand why the Centre has not taken a decision on my proposal which will be in the larger interest of the community, particularly those residing in the mining areas.


SIDDHARTHA SHANKAR MISHRA,
BUREAU CHIEF, THESE DAYS,
ODISHA