Karnataka labour minister proposes 5% cess on vehicles to support informal and gig workers

There are around 45 lakh unorganised workers in Karnataka

Karnataka labour minister Santosh Lad has proposed to impose a 5% cess on newly-registered vehicles to support the welfare of more than 45 lakh informal and gig workers in the state.

Speaking to reporters at Vidhana Soudha on September 7, Lad said the state government has proposed to impose a cess to ensure the welfare of informal and gig workers and their transition into the organised sector by providing social security benefits such as health, education, and insurance.

He said the majority of employees in the transport sector including drivers, conductors, cleaners, and mechanics, are employed in the private sector, where they lack job security. "In addition to this, app-based drivers attached to Ola and Uber also fall into the category. We need to provide them social security benefits such as health, education, and insurance".

At present, Karnataka levies one of the highest road taxes in the country in the range of 13%-20%.  "At present, we are imposing 11% cess including 10% infrastructure cess and 1% urban transport cess. The state government has to take a final decision to implement the proposal to impose a 5% cess," said a senior transport department official.

The minister said 4 lakh individuals are working for online services, including Swiggy and Zomato, but they currently lack social security. "For the welfare of those working in this sector, a certain amount of cess will be deducted from the companies they work for, and a provident fund will be established for them," he said.

Ahead of Karnataka polls, Congress leader Rahul Gandhi interacted with Zomato, Swiggy delivery agents in Bengaluru.

Karnataka Chief Minister Siddaramaiah, who presented the state budget on July 7, said they will provide an insurance cover of Rs 4 lakh to gig workers of e-commerce companies like Zomato, Swiggy, Amazon,etc to ensure their social security.

In July, Rajasthan approved a bill to impose a surcharge on online transactions via platforms like Amazon, Ola, and Zomato to fund welfare benefits for gig workers, the first such scheme in the country.

"There is also a  proposal to construct 50-bed capacity hospitals in various parts of the state for the benefit of workers, and a representation has already been submitted to the Union government in this regard," said Lad.

Similarly, about 20,000 workers employed in the cinema industry currently lack any form of job security and the government is considering providing them with benefits, he said. "Going forward, 1% of the movie ticket prices will be collected as cess, with the government estimating the sale of 5 crore movie tickets annually," he adds.

While a cess is being levied and collected at the rate of 1% of the cost of construction by the state governments under the Building and Other Construction Workers Welfare Cess Act, of 1996, it often remains unspent.

Also read: Karnataka government will provide insurance facility of Rs 4 lakh to gig workers of e-commerce companies