However, the civic administration in the state opposes LBT being linked with VAT
By EB Bureau
Tuesday, February 04, 2014: Maharashtra chief minister Prithviraj Chavan has said that the state government is ready to link local body tax (LBT) with value added tax (VAT), but the mayors of various cities are against this move. Those from the civic administration of the state’s cities said that LBT should be in the hands of the municipal corporations and there is no need to connect LBT with VAT.
Meanwhile, traders affiliated to Nag Vidarbha Chamber of Commerce (NVCC) have approached leaders of the Congress party and UPA president Sonia Gandhi through MP Vilas Muttemwar, to push their agenda. NVCC is highlighting the alternatives to LBT suggested by the Maharashtra Economic Development Council (MEDC).
MEDC has suggested replacing LBT with a 20 per cent surcharge on VAT and hiking the stamp duty by 1 per cent. Traders of the state were banking on this alternative to LBT and were hoping that the state government would act on it. But despite continuous reminders from MEDC, the state government has remained indifferent to this suggestion. Hence, the local traders of Maharashtra once again resorted to agitation and went on strike on December 13, 2013.
Informs Mitesh Mody, action committee member, Federation of Association of Maharashtra (FAM), and committee member of All India Radio and Electronics Association (AIREA), “MEDC’s recommendation has taken care of all the objectives of LBT like meeting the revenue target. Also, as the municipal corporations enjoy their autonomous status and want to retain it, MEDC’s recommendation has taken care of that, too. So why is the government objecting to it?”
MEDC was formed by various business guilds of the state and acts as a think tank for the state government. According to NVCC, MEDC had conducted a study in consultation with the chief minister, based on which it suggested that products with a VAT of 5 per cent should be levied a surcharge of 1 per cent. Similarly, products with a VAT of 12.5 per cent should be levied a surcharge of 2.5 per cent, while products with 25 per cent VAT should have a surcharge of 5 per cent.
Meanwhile, LBT has led to a drop in the revenue of municipal corporations, including Nagpur Municipal Corporation (NMC). Hence, to make the government realise that the LBT model will not work, Nagpur traders observed a bandh on December 13, 2013.
