By Our Correspondent in Bhubaneswar, February 17, 2015 :

Odisha government in principle has agreed to implement some of the recommendations of the Fourth State Finance Commission (FSFC) for fiscal empowerment of the local bodies for decentralized governance ensuring faster development, as per the Action Taken Report [ATR] presented by finance minister, Pradip Kumar Amat in the House on Monday.

The state government has accepted FSFC’s recommendation to limit the total transfer to Local Bodies within 10% of net divisible pool of state taxes projected for the award period from 2015-20. In fact, the state government announced to transfer Rs 12792.77 crore to local bodies as against the recommendation of the Commission of Rs 12740.08 crore, an increase of 0.41%.

The government, however, did not accept to leave the local bodies to levy and collect the entertainment tax. “The government has decided that the present system should continue…..In view of the lack of capacity of local bodies to administer the tax, it is felt necessary to continue to entrust the levy and collection of entertainment tax to commissioner of commercial taxes”, the ATR said.

The Commission recommended total transfer of Rs 25325.03 crore to the three tiers of local bodies during 2015-16 to 2019-20. The balance Rs 12584.95 crore has been recommended by FSFC to be met by the 14th Finance Commission to augment the consolidated fund in order to supplement the local bodies during 2015-20.

The ATR further said, the government will consider the Commission’s suggestion on institutional and structural strengthening, resource generation and legal hurdles. The line departments have been asked to examine the recommendations and suggestions on merit and take appropriate followup action within a stipulated time frame in consultation with the High Level Monitoring Committee headed by the chief secretary.

The FSFC recommended that Section 131 of the Municipal Act and Gram Panchayat Act should be amended to empower local bodies to impose advertisement tax at the rates decided at their level without seeking Government approval to earn more revenue.

The Commission has further recommended that the municipal bodies should be given freedom to collect annual license fees within their jurisdiction for trade and business by suitable amendment of the relevant acts.

The rates and maximum collectable amounts from industries and factories carrying on dangerous and offensive trades have been fixed under 290 (7) of the Act decades back. “The Commission feels that restrictions should be removed and amount to be charged should be the discretion of the municipal bodies,” it said.

Under the Odisha Gram Panchayat (Minor Forest Produce Administration) Rules, 2002, the gram panchayats are entrusted with regulation of 69 minor forest produces (MFPs) and collection of registration fees from the dealers. The registration fee of Rs 100 per trader irrespective of the volume of transaction continues for more than a decade, it said.

The Commission recommended modification of the rules to fix a time-frame for panchayat samitis to communicate the minimum procurement price of MFPs, failing which the gram panchayats should be given the freedom to fix the price at their level.

The gram panchayats should be empowered to seize illegally procured MFPs and inform the divisional forest officers (DFOs) for initiation of penal action.

Besides, it also recommended that Entertainment Tax should be entirely assigned to the local bodies for levy and collection by amending the Act.