The White Paper presented by Finance Minister N. Marie Wilson on Tuesday said “the State’s own-tax effort has collapsed”.

Giving an account of how the State’s Own Tax Revenue (SOTR) fared in the last five years vis-à-vis three “peer States” (Maharashtra, Gujarat, and Karnataka), the White Paper stated that the SOTR marked “the biggest component which is most directly within the State’s control and the most reliable indicator of fiscal effort”.

The State’s “own-tax revenue is drawn from five principal sources”, which pertained to commercial taxes (Goods and Services Tax), Value Added Tax (VAT) on petroleum, State Excise and VAT on liquor, Stamps & Registration, Motor Vehicle Tax, and other taxes.

Within the broader commercial taxes, GST accounted for around 53%; VAT on liquor, 28%; and VAT on petroleum products, 19%. “[Revenue from] Commercial taxes, as a proportion of GSDP (Gross State Domestic Product), have declined from approximately 4.53% in 2021-22 to approximately 3.89% in 2025-26 — a decline that was not seen in the case of peer States,” the document said.

Pointing out that the Total Revenue Receipts (TRR) fell from about 10% of GSDP in 2021-22, the start of the post-COVID window, to 8.32% during 2025-26, the official document stated that the SOTR-to-GSDP ratio declined from 5.93% to 5.45%, the “lowest in the State’s history and the steepest decline” among the benchmarked States. But in 2006-07, SOTR, as a percentage of GSDP, had a peak of 8.94%. The cumulative decline from the historical peak meant approximately ₹1.23 lakh crore in annual revenue had been foregone — around 90% of the provisional fiscal deficit for 2025-26.

“The decline is spread across all major tax heads — GST, VAT on petroleum, State Excise, Stamp Duty and Motor Vehicle Tax,” the document pointed out, attributing a significant part of it to “leakages and systemic corruption” in revenue-collecting departments, instead of structural economic disadvantage.

The White Paper mentioned that “the peer comparison on SOTR-to-GSDP presents a concerning analysis”, raising the question of whether “Tamil Nadu’s revenue decline is the result of external structural forces or internal policy and administrative failure”.

Over the post-COVID window from 2021-22 to 2025-26, Maharashtra’s SOTR-to-GSDP ratio increased by 1 percentage point, while Karnataka and Gujarat more or less maintained their ratios. “Tamil Nadu alone has recorded a decline in the ratio — from 5.93% in 2021-22 to 5.45% in 2025-26,” the document said.

As a result of the poor performance in SOTR collections, the ratio of interest payment, as a share of SOTR, had risen from 33.83% in 2021-22 to 34.83% in 2025-26 (provisional).

“More than one-third of every rupee the State raises through its own taxation effort goes directly to servicing past debt,” the White Paper added.

The White Paper said mining revenue was among the “most striking examples of stagnation” in non-tax income of Tamil Nadu.

Even though the revenue collections during 2025-26 went up to ₹4,433 crore (provisional) from ₹1,942 crore during 2024-25, after the imposition of Mineral Bearing Land Tax, the revenue was “broadly flat” during post-COVID years, the report said.

Pointing out that mining revenue, as a share of total revenue receipts, represented barely 1.5%, the White Paper said “this is not a reflection of resource scarcity”. The State had “substantial deposits” of granite, limestone, sand, quartz, vermiculite, and a range of other minor minerals. Royalties, rents, and seigniorage fee on minor minerals contributed to mining revenue, the report said.

“The revenue potential of this head is materially larger than current collections suggest,” the White Paper said, identifying several factors for the present state of affairs. Among the factors were “lack of revision in fees, leakage in the assessment of minor mineral extraction, intentional holding up of applications for extraneous reasons, inadequate enforcement against unauthorised mining, and slow modernisation of departmental systems”.