Municipalities across Nagaland have been empowered to levy various taxes and fees within their jurisdictions, aimed at bolstering revenue streams to support their functions and duties.
Under the Nagaland Municipal Act 2023, municipalities are now authorized, with prior sanction from the government, to impose a range of taxes, fees, and tolls. These levies are earmarked for financing essential municipal services and initiatives.
The specified taxes and fees include:
. tolls and fees;
. sanitation fee;
. advertisement tax other than advertisement published in newspapers;
. entertainment/show tax;
. fire tax;
. tax on vehicles and animals;
. utility services charges; and
. licenses fee.
Additionally, municipalities have the latitude to levy any other tax permitted by the State Legislature under the Constitution of India, subject to government approval.
Government oversight plays a crucial role in this framework. The government retains the authority to determine the rates at which taxes are levied. Furthermore, it can issue directives mandating municipalities to impose specific taxes within specified timelines. In instances where municipalities fail to comply with such directives, the government reserves the right to levy the tax itself at the prescribed rate.
Constitution of Finance Commission
According to NMA 2023, a Finance Commission must be constituted. Under the provisions of the NMA, the Governor is tasked with constituting a Finance Commission to review the financial position of the Municipalities.
The commission is entrusted with making recommendations to the Governor on several key matters, including the distribution of tax revenue between the state government and municipalities, allocation of specific taxes to municipalities, grants-in-aid from the state’s consolidated fund to municipalities, measures to enhance municipal finances, and any other financial issues referred to it by the government.
The Finance Commission is to be composed of one or more individuals appointed by the Governor, following a prescribed procedure. The conditions of service and tenure of the Finance Commission members are subject to rules prescribed by the Governor.
The Finance Commission is empowered to determine its own procedure and is vested with certain powers as provided in the Act, along with any additional directives from the government.
The Governor is required to present all recommendations made by the Finance Commission to the State Legislative Assembly, along with an explanatory memorandum detailing the actions taken in response to those recommendations.