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Not to roll back VAT hike
September, 01st 2009

Small traders and small-scale entrepreneurs of Madhya Pradesh are crying for rationalisation of taxes in the state.

They have also demanded from the state finance minister to roll back recent hike of 1 per cent in value-added tax (VAT) and abrogation of entry tax.

The state government has imposed entry tax on even fly-ash, which is procured free of cost all over the country to reduce pollution in the atmosphere, Ranjit Vithaldas, president of Federation of Madhya Pradesh chambers of commerce and industry, a 300-member body of traders and small-scale entrepreneurs, said.

The traders also demanded withdrawal of mandatory disclosure of goods in intra-state transportation in Form 49 and removal of check posts at state borders.

The state finance minister, however, refused to accept all the demands of the traders and entrepreneurs by saying that the central government had reduced its funding to the state and there were no means to meet the budgetary deficits but to increase taxes.

Raising concerns over high tax rates in the state, he said, Why government has not taken us into confidence when we are partners of the state in economic development? We want level playing field in comparison to other states. A promise made by any government should be delivered by the existing government, he said.

The state government in its budget 2009 has raised VAT on various commodities from 4 per cent to 5 per cent.

Further, the central tax, which should have been zero per cent by this fiscal, is still levied at 2 per cent, besides mandi tax of 2.2 per cent, entry tax 2 per cent and few cess and surcharges.

It also has increased stamp duty registration charges from 0.5 per cent to 1 per cent on property transfers even in family businesses.

The state has higher rate of taxes on even used vehicles, stamp duty registration on property transfers have gone up, value added tax is also up by one percent, how can be compete with other states like Maharashtra, Gujarat, Rajasthan and Chhattisgarh, Ashok Jain, an office bearer of Mahakaushal Chambers of Commerce asked and added, increase in VAT is contrary to uniform structure of tax the primary object of VAT.

Turning down demands of the traders and entrepreneurs, state finance minister Raghavji said, VAT has been increased after calculating all other means of revenue generation as centre has slashed our grants by more than Rs 5000 crore from this year. There is an additional strain of Rs 3000 crore on state kitty after implementation of sixth pay commission recommendations.

We have no option but to raise taxes. Alarmingly 40% of the state population is ultra poor, there is a fall in stamp duty and registration fee of more than Rs 300 crore, as a result we have additional financial burden of more than Rs 8000 crore. If economic conditions will permit us we will definitely rationalize taxes. He also refused to slash mandi tax as the funds, according to him, are utilised in rural road construction.

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