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CM must take people in confidence over LBT

The ongoing conflict over the introduction of Local Body Tax (LBT) and the tough posture adopted by CM Prithviraj Chavan reminds us of another Chavan: the late CM SB Chavan. Both the Chavans have a few common features: resoluteness and unyielding nature, tinged with a go-getter attitude.

Unmindful of the opposition within and outside the government, Prithviraj Chavan appears firm on implementing LBT, the new tax regime aimed at replacing octroi collected by municipal corporations. He is unmoved despite the strong pitch by traders, opposition parties, and coalition partner NCP, and most importantly, his own party MPs against the manner of LBT’s implementation.

SB Chavan, who served the state twice, was equally firm when it came to implementing his decisions. He waged a battle with his political opponents, uncaring for his position. Be it the land ceiling act, ‘zero budget’ concept or his plan to curtail water supply from dams to sugarcane fields to eight months from 12 months, Chavan refused to surrender.

Another feature both share is integrity, and attendant on it, the confidence of the Congress leadership thrust upon them. In Prithviraj Chavan’s case, any Congress CM would simply have stayed the decision to implement LBT after witnessing stiff opposition by traders and the confrontationist stand taken by ruling coalition leaders. In this case, the CM must take into consideration that howsoever noble his intention may be regarding LBT, he has to take the people in confidence.

People are being told that LBT was in addition to octroi, which might result in a price rise. Another argument is that the LBT was going to be costlier than the octroi. Hapless consumers are the biggest sufferers, with the markets having downed shutters for the whole of last week.

Besides, many find it difficult to understand the arithmetic of LBT, and have started losing patience. They are asking why they should support traders when most refuse to sell products below the MRP even though it’s not a fixed price and comes with huge profit margins.

But the CM must convince the people. Despite his pragmatic approach, SB Chavan had to succumb to the political game plan of then leaders when he decided to implement the concept of ‘zero budget’. During 1986 to 1988, he stopped recruitment in government jobs and curtailed non-viable expenditure because the state was passing through a severe financial crisis. He announced his intention of curtailing the dam water supply to sugarcane down to eight months as a larger part of the state was facing drought.

His intentions were perfectly in tune with the contemporary situation but political lobbies worked overtime to convince the Congress leadership that Chavan might hurt Congress interests and offer the opposition parties an opportunity to expand.

There is no doubt that the system of octroi has become obsolete and it exists only in Maharashtra. Also, it needs to be looked into as to why traders were opposing LBT when, for the report on LBT submitted earlier this year, the study group appointed by the state had five of their representatives.

A key point being looked over is that LBT is a stopgap arrangement. In the near future it is going to be subsumed with the general sales tax. Traders from Mumbai are rather aggressive, conveniently ignoring the fact that in Mumbai the LBT regime will start from October 1 this year.

With LBT, the format for collection of tax will change. Traders will have to keep books of accounts system. And they are more concerned about maintaining books and the subsequent audits at various levels. Also, the employees of civic bodies need training to adopt the new system.

LBT is also set to hurt the work equation of middlemen at octroi nakas, corporators and civic employees.

Clearly, there is more politics than meets the eye. One cannot understand why the Shiv Sena-BJP combine is opposing LBT, considering that the new tax regime is certain to add a few thousand crores to the BMC’s kitty, which is controlled by them. Additional funds will be of great help to improve city infrastructure. And yet, the saffron alliance is opposing LBT, which begs an explanation.

One of the major demands being pushed by the traders is that LBT be recovered along with VAT, which was being done in neighbouring Gujarat. But the state is not ready for this on various accounts. One of the reasons is manpower shortage. Almost 30 per cent posts in the state sales tax department have been lying vacant.

All said, the CM may be wary of entrusting the job to the sales tax department as it is under the control of Dy CM Ajit Pawar, the NCP man who is in charge of the finance department. Going by the present ‘camaraderie’ between the Congress and NCP, the CM is unlikely to approve thrusting the power to release collected funds to civic bodies across the state on his deputy.

— The writer is Political Editor, MiD Day¬†

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