First SFC Report
The First State Finance Commission succeeded in integrating seventeen small specific purpose grants into a broader general purpose grants and also in streamlining the determination and transfer of the share of State taxes, making it fully formula-based and totally non-discretionary.
The recommendation of the first SFC were as follows:-
(1) Expenditure on elections to Local Governments other than District and Block Panchayats may be met by them.
(2) Government may liquidate arrears of share of taxes / grants due to Local Governments in three instalments.
(3) Plinth area may be adopted as the basis for Property Tax.
(4) For arrears of taxes due to Local Governments from different payees penal interest at 2% per month may be charged.
(5) Government may specify only the minimum rate for fees.
(6) Land Tax may be doubled.
(7) Formula based devolution of funds may be followed.
(8) Maintenance Grant should be based on current cost of construction.
(9) Vehicle Tax compensation may be 25% of net collection of Motor Vehicles Tax.
(10) Tax mapping may be followed.
(11) A Fund for local government development may be built up for leveraging funds and for subsidizing the interest rate of non-remunerative but essential schemes.
(12) A statutory authority should give annual reports to the Governor showing the quantum of statutory and non-statutory grants due to local governments and the amount actually paid.
(13) A special Cell may be constituted to watch the implementation of recommendations of the SFC.
Read more about this topic: State Finance Commission (Kerala)
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