Maharashtra government in catch-22 situationMaharashtra government in catch-22 situation

Statewide protest against Local Body Tax

The Maharashtra Government headed by Congress Chief Minister Prithviraj Chauhan finds itself in a catch-22 situation over the much publicised Local Body Tax (LBT) issue since one month. The high level committee appointed by the government to resolve the deadlock failed to strike any hope in its very first meeting held in Mumbai on May 16. This failure has resulted in intensifying the strike of the businessmen and traders in the State after a brief break on the occasion of Akshay Tritiya festival.

The traders in the State have opposed the government decision to replace the octroi tax system by introducing Local Body Tax. They claim that the new system would lead to inspector raj and corruption. The Chairman of the CREDAI, the apex body of the traders and developers, Lalit Jain said the new tax system would result in rise in corruption and would be detrimental to business as well as consumers. “There is a potential threat of LBT becoming a breeding ground of corruption,” he said. He had suggested the government to increase VAT to compensate octroi.

Shri Jain explained that the government would be unnecessarily burdened with the creation of additional tax collecting machinery for LBT which could be saved by just raising the VAT. He expressed the apprehension that the new machinery and the new system of search operations that come with LBT will open up another window for corruption. Appealing to the Chief Minister Prithviraj Chauhan to reconsider LBT and opt for much more practical approach he said the heavy tax regime would discourage the new business and prospective buyers and would lead to fresh capital flow outside Maharashtra.

The octroi system was the source of revenue for the local self-government bodies such as municipal councils or corporations. The tax was charged on the entry of goods. But with this new LBT the petty businessman having a turnover of Rs one lakh has been brought within the ambit of LBT. The bigger businessmen and traders and petty shopkeepers or mobile shop owners are weighed in the same balance.  

—Virag Pachpore