Decision to replace octroi with LBT a betrayal, says Fadnavis
April, 25th 2013
Opposition parties seem to have taken up the cause of traders protesting the government decision to replace octroi with local body tax (LBT).
BJP state president Devendra Fadnavis said, "The alternative to octroi was value-added tax (VAT), which has been in existence since April 1, 2005. The government can't justify LBT."
CM Prithviraj Chavan said, "VAT was not an alternative to octroi. The decision to abolish octroi was taken after a consensus on LBT."
Fadnavis dismissed the government claim. "Nothing stopped the government from abolishing octroi when VAT was introduced."
He said, "The Gujarat government abolished octroi. It introduced VAT with 1 per cent increase in surcharge."
Finance department officials said, "When LBT was enforced in six municpal corporations initially, there was no protest."
According to a finance ministry report, the revenue collected from sales tax/ VAT, state excise and taxes on vehicles is Rs 63,338 crore for 2011-12. Sales tax/VAT collection alone is Rs 50,596 crore, the report says.
Opposition parties are attributing the unrest among traders to the Congress-NCP government's failure to simplify the tax regime. They say the decision to bring LBT has exposed its flip-flop.
In 2005, then finance minister Jayant Patil indicated VAT was the beginning of end of taxation woes for traders.
At that time, the government said VAT would put an end to the multiple tax collection system. However, the government did not abolish octroi as there was apprehension of a political backlash. It put the decision on hold till there was a consensus among parties and sanction from municipal bodies.
BMC, with Shiv Sena and BJP at its helm, was opposed to abolition of octroi.