Orissa plans to levy forest development tax on minerals
December, 26th 2011
In its effort to mop up more revenue, the Naveen Patnaik government is now planning to impose a forest development tax on minerals extracted from forest areas.
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/cess on minerals by the state is not permissible.
The governments move for FDT comes in the aftermath of a state Cabinet resolution for levying mineral resources rent tax on iron ore at 50 per cent of the surplus rent. The state Cabinet had passed a resolution for Mineral Resources Rent tax. The Cabinet note said that the tax collected from mine owners would be spent for improving social and physical infrastructure, strengthen welfare measures, besides improving the livelihood of people in the mining areas. Making a statement in the Assembly on Tuesday, the Chief Minister said the state government cannot be mere bystander to exploitation of public resources for the benefit of a few