It was foreseen and true to the embarrassment of Telangana government one can easily see the tax base eroding to the residuary State of Andhra Pradesh. Since Hyderabad remains to be the capital city of both the Telugu States, the emigration is around 3000 plus enterprises, businesses, and trading houses shifting to AP. But as the common capital siezes to exist after AP gets a clear idea of setting up a separate capital, then the erosion will be far higher.
This tax base eroding is a cause of concern because Hyderabad is the highest tax collector in the united AP state. But later the tax income would decrease indefinitely because of VAT and other taxes would be reduced with reduced number of people visiting Hyderabad. At present Telangana State has eight districts which have low potential for tax based income and with revenue eroding away from Hyderabad, all the false picture till date will have to shed the pretensions.
“There will be erosion of tax base not only in respect of VAT, but also stamps and registration, motor vehicles tax and state excise,” the Telangana government has said in a memorandum submitted to the 14th Finance Commission. The cause of concern of T government is no illusion because major percent of united AP’s revenues came from Hyderabad and AP migrants who pay high amount of different kind of taxes to the government.
