Shiv Sena locks horns with BJP over Rs 7,000 cr revenue

Feb 14, 2013, 06:34 IST | Chetna Yerunkar

Slamming the Local Body Tax (LBT) as a replacement for Octroi, Shiv Sena picks holes in the new proposal stating that traders will not voluntarily disclose their business volumes, thereby creating a huge dent in the BMC's collection kitty

The tariff, publicised as the most effective alternative to replace octroi in Brihanmumbai Municipal Corporation (BMC), has become a bone of contention with even the ruling BJP-Shiv Sena alliance in the civic body appearing fractured over the issue.

Octroi is a tax levied on goods at the entry in the city and is collected in cash on a daily basis. It is easier to collect with the presence of nakas at the border. File pic

After the municipal commissioner announced Local Body Tax (LBT) in his 2013-14 budget speech, Sena came out in opposition. On the other hand, BJP appears undecided on the matter, while Congress has adopted an interesting stance.

Many leaders believe that LBT will not benefit the corporation and that octroi should continue so that the civic body does not suffer losses. Representation pic

While octroi is a tax levied on goods at the entry in the city and is collected in cash on a daily basis, LBT is a lump sum charged on the value of goods and is payable within 40 days of bringing the merchandise into the municipality.

The civic administration has promised to encourage a business-friendly image of Mumbai and to remove bottlenecks associated with the present situation of octroi. The current cash flow of the administration will be affected with the new system in place, as it will get the revenue at the end of every month. BMC has decided to implement the new model from October.

The implementation of LBT, however, is in nascent stages, as a proper study will be first conducted, and the new system will be executed only if the results are favourable. But political parties are unconvinced about the self-declaration clause, as they fear no one would comply. Octroi is easier to collect with the presence of nakas at the border.

Yashodhar Phanse, group leader of Sena in BMC, said, “This is not at all acceptable. The administration cannot do something like this and let corruption grow in the city. There will be loss of revenue as every year octroi generates more than Rs 7,000 crore for the corporation. Mumbai’s is the largest municipal corporation of the state and cannot be compared to any civic body.”

Its ally’s stand has put BJP in a bind. “We will first see the reports of the study that is going to be carried out by University of Mumbai and Tata Institute of Social Sciences, and if the expected revenue is lower than the amount collected from octroi, we will also oppose LBT,” said party leader Dilip Patel. Congress and NCP have neither supported nor opposed the new system. The grand old party has, in fact, assured citizens that if need be it will request to the state government to withdraw the order of LBT from BMC.

Dnyanraj Nikam, opposition leader in the civic body, said, “We are not sure of the revenue that will be amassed from LBT and for us it is important that the corporation doesn’t suffer because of diminished proceeds. If the reports of the study are unfavourable, we would speak to the state government and ask for some other option.”

Nationalist Congress Party has also supported this posture. Party leader Dhananjay Pisal said, “BMC’s revenue should not diminish at any cost. Every year income through octroi increases by 15-20 per cent. Hopefully, the new system will uphold the trend.”

A vehement critic of LBT has been the Samajwadi Party. “It will usher in ‘Inspector Raj’ and will lead to harassment of traders. It defeats the very purpose for which it’s being introduced to make Mumbai more business-friendly. We oppose the present form, which does not have any checks and balances,” said SP leader Rais Shaikh.

The proponent of the idea remains confident of its potential. “LBT would also give dividend like octroi. But everything hinges on the findings of the study. Only if revenues are not hampered will we implement the new system,” Sitaram Kunde had said.

Rs 7,000 cr
Approx revenue generated by octroi every year

Go to top