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The White Paper presented by Finance Minister N. Marie Wilson connected Tuesday said “the State’s own-tax effort has collapsed”.
Giving an relationship of however the State’s Own Tax Revenue (SOTR) fared successful the past 5 years vis-à-vis 3 “peer States” (Maharashtra, Gujarat, and Karnataka), the White Paper stated that the SOTR marked “the biggest constituent which is astir straight wrong the State’s power and the astir reliable indicator of fiscal effort”.
The State’s “own-tax gross is drawn from 5 main sources”, which pertained to commercialized taxes (Goods and Services Tax), Value Added Tax (VAT) connected petroleum, State Excise and VAT connected liquor, Stamps & Registration, Motor Vehicle Tax, and different taxes.
Within the broader commercialized taxes, GST accounted for astir 53%; VAT connected liquor, 28%; and VAT connected petroleum products, 19%. “[Revenue from] Commercial taxes, arsenic a proportionality of GSDP (Gross State Domestic Product), person declined from astir 4.53% successful 2021-22 to astir 3.89% successful 2025-26 — a diminution that was not seen successful the lawsuit of adjacent States,” the papers said.
Pointing retired that the Total Revenue Receipts (TRR) fell from astir 10% of GSDP successful 2021-22, the commencement of the post-COVID window, to 8.32% during 2025-26, the authoritative papers stated that the SOTR-to-GSDP ratio declined from 5.93% to 5.45%, the “lowest successful the State’s past and the steepest decline” among the benchmarked States. But successful 2006-07, SOTR, arsenic a percent of GSDP, had a highest of 8.94%. The cumulative diminution from the humanities highest meant astir ₹1.23 lakh crore successful yearly gross had been foregone — astir 90% of the provisional fiscal shortage for 2025-26.
“The diminution is dispersed crossed each large taxation heads — GST, VAT connected petroleum, State Excise, Stamp Duty and Motor Vehicle Tax,” the papers pointed out, attributing a important portion of it to “leakages and systemic corruption” successful revenue-collecting departments, alternatively of structural economical disadvantage.
The White Paper mentioned that “the adjacent examination connected SOTR-to-GSDP presents a concerning analysis”, raising the question of whether “Tamil Nadu’s gross diminution is the effect of outer structural forces oregon interior argumentation and administrative failure”.
Over the post-COVID model from 2021-22 to 2025-26, Maharashtra’s SOTR-to-GSDP ratio accrued by 1 percent point, portion Karnataka and Gujarat much oregon little maintained their ratios. “Tamil Nadu unsocial has recorded a diminution successful the ratio — from 5.93% successful 2021-22 to 5.45% successful 2025-26,” the papers said.
As a effect of the mediocre show successful SOTR collections, the ratio of involvement payment, arsenic a stock of SOTR, had risen from 33.83% successful 2021-22 to 34.83% successful 2025-26 (provisional).
“More than one-third of each rupee the State raises done its ain taxation effort goes straight to servicing past debt,” the White Paper added.
The White Paper said mining gross was among the “most striking examples of stagnation” successful non-tax income of Tamil Nadu.
Even though the gross collections during 2025-26 went up to ₹4,433 crore (provisional) from ₹1,942 crore during 2024-25, aft the imposition of Mineral Bearing Land Tax, the gross was “broadly flat” during post-COVID years, the study said.
Pointing retired that mining revenue, arsenic a stock of full gross receipts, represented hardly 1.5%, the White Paper said “this is not a reflection of assets scarcity”. The State had “substantial deposits” of granite, limestone, sand, quartz, vermiculite, and a scope of different insignificant minerals. Royalties, rents, and seigniorage interest connected insignificant minerals contributed to mining revenue, the study said.
“The gross imaginable of this caput is materially larger than existent collections suggest,” the White Paper said, identifying respective factors for the contiguous authorities of affairs. Among the factors were “lack of revision successful fees, leakage successful the appraisal of insignificant mineral extraction, intentional holding up of applications for extraneous reasons, inadequate enforcement against unauthorised mining, and dilatory modernisation of departmental systems”.
