Thursday, January 23, 2014

FAM and civic bodies to meet on January 28 to discuss abolition of LBT

Members of the Federation of Associations of Maharashtra (FAM) would meet officials of municipal corporations in Nashik on January 28, 2014, to discuss the abolition of local body tax (LBT), which has already been imposed in 25 (of the 26) civic bodies in the state (the exception being Mumbai).

Mohan Gurnani, president, FAM, said, “LBT is not only affecting the traders, but it would put an extra burden on consumers as well.” To protest against the imposition of the levy, traders in Mumbai and Nagpur downed their shutters for 28 days, while their counterparts shut shop for twelve. However, the state government did not yield.

“There were reports of harassment and corrupt practices by the staff of the civic bodies where LBT has been imposed. We do not oppose any taxes, but are against harassment by these officials. LBT has not been imposed in any part of the world, and even the Centre is in favour of a single window for taxes So why is the Maharashtra government planning to open more tax windows,” he asked.

“If Maharashtra imposes taxes like these, industries may relocate to other states, because it would become difficult for the traders and the industries to run their businesses,” Gurnani said.

“We have also approached various parties, including those constituting the ruling alliance, to convince them about the ill-effects of LBT and octroi and the need to find out an alternative that would not promote corruption and be simple to understand and comply with. The alternative should also keep inspector raj at bay,” he added.

“All the parties expressed their support to FAM, and assured us that if they came to power they would abolish LBT and ocoroi. We invited the senior leaders of all parties to this press conference, but only the Aam Aadmi Party (AAP), represented by its Maharashtra convenor Mayank Gandhi, attended it. We do not support any political party, but we want a written assurance that they would abolish the tax upon being elected to power,” Gurnani said.

He said, “Even the Maharashtra Economic Development Council (MEDC), a public policy research organisation recognised by the state government as an advisory body on major social and economic issues concerning the state, appointed a committee headed by Subodh Kumar (former principal finance secretary, commissioner of sales tax and municipal commissioner) to study LBT and suggest alternative sources of revenue for local civic bodies. MEDC said that octroi was bad, but the LBT was the worst.”

At a recent meeting of representatives of all the trade associations from 26 municipal corporation areas held in Pune, it was unanimously resolved to not to suggest any alternative to LBT and octroi to the state government, and to demand the total abolition of the levies from the state of Maharashtra instead.

“Whenever an alternative was suggested to the government, it was found that instead of replacing the cumbersome tax with the suggested alternative, the government took the advantage by making it an additional tax,” stated Gurnani, adding that a valid reason to abolish LBT was that the state government's income from value-added tax (VAT) had been increasing by at least 25-30 per cent every year. He added that it was easy for the government, which promised to abolish octroi while introducing VAT , to spare Rs 6,000-Rs 7,000 crore from its kitty to finance the civic bodies’ needs.

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