Local Government Finance in Kerala - Non-tax Revenue - Licence Fee

Licence Fee

This constitutes the most important source of non-tax revenue. The following are the important items for which license fees or maintenance fees are collected by local governments.

Trade Licences

In Grama Panchayats, licencing of trades is done under Kerala Panchayat Raj (Dangerous and Offensive Trade) rules. The rule fixes the maximum fee based on turn over. Urban local governments can set the rates as per section 492(5) of the Kerala Municipality Act 1994 and a look at the fees being collected shows that the local governments set very low rates.

In Urban Local Governments, the rates for construction or establishment of factories and installation of plants or machinery were fixed as per the rules issued in 1966. The rates were never revised for nearly four decades. But in rural local governments, the rates fixed a decade ago are in force.

1. Licences under Prevention of Food Adulteration Act. Central Act on prevention of food adulteration and the rules issued under it empowers the local governments at the lower tier to issue licences under it and collect fees for issuing licences. The rates of fees were recently revised as per the revised PFA Rules, but the order was frozen by Kerala Government since 7 June 2007.

2. Licences under Kerala Cinema Regulation Act. Kerala Cinema Regulation Rules in accordance with the Kerala Cinema Regulation Act govern the Theatre construction and installation of machinery. The existing rates cannot be revised as film is a declining industry.

3. Licensing of Private Slaughter House. Rate of rent and fee for slaughtering animals in public and private slaughter house is fixed in Grama Panchayats as per rules framed under the section 229 & 230 of Kerala Panchayat Raj Act 1994 and in Municipalities as decided by the Municipal Council under section 452 of the Kerala Municipality Act 1994.

4. Licensing of Private Markets. Licence fee for opening private markets are fixed based on the floor area of the market and the renewal fee does not exceed one-third of the income the licence has earned from the market in the previous year.

5. Licences under the Kerala Places of Public Resort Act. Rule 28 of the Kerala Places of Public Resort Rules 1965 in accordance with Kerala Places of Public Resort Act 1963 fixes the rate for licence based on area, type of building etc. of the public resort. Differential rates are provided for resorts housed in permanent buildings, temporary buildings, enclosures without a roof etc.

6. Licensing of Private Parking and Halting Places. The licence fee is fixed as per section 227 & 228 of Kerala Panchayat Raj Act 1994 and section 472 of Kerala Municipality Act 1994 for public halting of carts, auto rickshaws, motor vehicles, motor boats etc. and for storing goods in open space.

7. Licensing of Burial and Burning Grounds . Lower tier local governments can maintain burial and burning grounds and collect fees for burning of carcasses.

8. Licensing of Brokers, Commission Agents, Weigh men, Measures etc.. The licence fee is fixed as per the section 13 of the Kerala Panchayat Raj (Public and Private Market) rules and section 458 (2) (e) of the Kerala Municipality Act.

9. Licensing of Animal Stalls kept for Commercial Purposes. This licence is issued as per section 444 of the Kerala Municipality Act. Now council fixes the rate and there is need to fix minimum rate by government. The provision needs to be extended to rural areas too.

10. Licensing of Special Trades like Butchers, Fishmongers, Poultries, Commission Agents and Brokers.

The licence is issued as per section 469 of the Kerala Municipality Act and that need to be included in the list of trade licences in Panchayats.