Mumbai Mayor Sunil Prabhu has said the Shiv Sena-BJP-led BMC would oppose the state government’s plans to introduce surcharge on Value Added Tax (VAT) as a replacement for octroi or Local Body Tax (LBT) for traders.

Prabhu on Thursday said such a move would ruin the civic body’s financial autonomy and considerably affect ongoing and planned development works across Mumbai.
“We believe that if the state intends to bring in surcharge on VAT and do away with LBT as a source of revenue, Mumbai should be kept out of this system as BMC will lose its primary independent source of income. We will be forced instead to collect dues from the state government and be at their mercy. This dependency will prevent us from taking up works at our own pace as the government is already known for its inordinate delays,” the mayor said.

Meanwhile, the BJP said it would study the state government’s proposal before deciding whether to join in the opposition. “We are only opposed to LBT. If the state brings in surcharge on VAT to replace LBT we don’t mind, if the corporation can continue to earn from octroi,” said BJP group leader Manoj Kotak.

Currently, the civic body earns maximum revenue from octroi and collected over Rs 7,200 crore in 2013-14. However on account of the state government’s delay in amending the Mumbai Municipal Corporation (MMC) Act, 1888, and rolling out LBT for Mumbai in 2013, civic officials claim a loss of revenue amounting to Rs 540 crore as upgrade of security at octroi nakas was also stalled by the indecision. to help us personalise your reading experience.

A senior civic official in charge of the assessment and collection department said the state government must consider Mumbai as a special case and take separate policy decisions in the matter.

“The state government must bear in mind that when taking away LBT, it should give us an alternate equally buoyant source of income that is also autonomous. Former municipal commissioner Subodh Kumar in a previous report to the Maharashtra Economic Development Council had recommended that in addition to introducing surcharge on VAT, some other measures should be taken to safeguard a steady flow of income for BMC. These will have to be considered seriously,” said the official, adding that the announcement has now finally given the corporation closure on the issue of LBT.