Bangalore/Kochi: Karnataka has increased taxes on tobacco and vehicles while reducing levies on some food items in its budget for 2010-11.
The state government also proposed a Rs600 crore scheme for developing urban infrastructure and a Rs500 crore programme to build at least 200,000 water harvesting units in villages.
Chief minister B.S. Yeddyurappa, who also holds the finance portfolio, said on Friday that value-added tax on items like masala powder and vermicelli would be reduced to 5% from 12.5%.
The state would still end the next fiscal year with a revenue surplus of Rs51.42 crore as it raises VAT on tobacco products by 2.5% and the motor vehicles tax by 1-2%.
Yeddyurappa also proposed setting up a micro-irrigation corporation with an outlay of Rs100 crore to provide assistance and technology to farmers.
Seperately, the Kerala government said it cannot eliminate revenue deficit by 2014-15 as suggested by the 13th Finance Commission.
Kerala finance minister Thomas Isaac, presenting his last full budget on Friday before the state heads for elections next year, said the deficit for 2010-11 would be Rs3,629.55 crore.
Isaac proposed to extend the ambit of welfare schemes and announced a Rs1,000-crore Green Fund for the next five years, earmarking an initial Rs100 crore for the next fiscal year.
He reduced the luxury tax on tourism to 7.5-12.5% in various categories, down from 10-15% earlier. The tax on beer and wine has been slashed by 10%, but that on other liquors has been increased by the same margin.