What infrastructure? Why pay cess?

What infrastructure? Why pay cess?
Some Money Spent On Devanahalli Airport, Rail Projects
The Times of India

Bangalore: When Anil Kumar, a resident of central Bangalore, bought a motorcycle recently, he was upset to find that the bike cost included a 10 per cent ‘infrastructure cess’.

“Just what ‘infrastructure’ am I paying for,’’ he wanted to know.

This Bangalorean’s attitude is no different from the lakhs of other citizens who pay ‘infrastructure cess’ each time they get a property registered or well, buy something (the cess is levied on sales tax as well).

According to government sources, the cess collected from all these sources comes to roughly Rs 400 crore a year.

RESULTS: What is the money used for? The cess goes to a consolidated fund and is released as and when required. According to sources, 28 per cent of this consolidated amount now goes to Bangalore Mass Rapid Transit Limited (BMRTL), 57 per cent goes for ‘infrastructure,’ and 15 per cent for roads.

Sources in BMRTL, which is handling the Metro Rail project, said they already have Rs 350 crore from the common account and must get another Rs 400 crore or so more. Metro Rail is still on, they insisted (despite the controversy over the pros and cons of metro and monorail), and expect to get the remainder when “construction begins’’.

The Infrastructure department in the government has been the “biggest beneficiary’’ of the cess, sources said. It has used the money for land acquisition in the Bangalore International Airport Ltd (BIAL) project, to fund 50 per cent of railway projects — Gadag-Sholapur broad gauge, Hassan-Mangalore broad gauge, Bangalore-Kengeri-Ramanagaram doubling and electrification — and to partly fund the Outer Ring Road project in Bangalore.

Data from other sources is, however, vague.

HISTORY: The ‘cess’ collection, began with a 5 per cent levy on petrol in Bangalore in 1994-95 to fund the then in-vogue ‘Elevated Light Rail Transit System’ (ELRTS). After ELRTS was scrapped, Bangaloreans, and people in other parts of the state, paid the levy till 2002, when it was withdrawn. In 2004, the cess was reintroduced and expanded to cover all infrastructure projects.

Now, it is levied on everything except petrol and petroleum products. There is even an infrastructure cess on the ‘permit fee’ people pay to fell timber and take other forest products. The cess is still being questioned in court. People like Kumar have filed some 150 petitions against the imposition of the cess under the Motor Vehicles Act.
There are also other writ petitions questioning its imposition under other Acts too.