State legislature unanimously approves resolution moved by finance minister Sudhir Mungantiwar
In a step closer towards formulating a unified law to subsume other indirect taxes on consumption and help the country move to a common market, Maharashtra became the ninth state to ratify the Constitution amendment bill for introducing the Goods and Services Tax (GST).
On Monday, the state legislature in a special sitting unanimously approved the resolution moved by finance minister Sudhir Mungantiwar.
Mungantiwar said that the state government would compensate civic bodies including the Brihanmumbai Municipal Corporation (BMC) for loss of revenue once the GST regime kicked in. The BJP's ally, the Shiv Sena is worried about the impact of octroi, which is the largest contributor to the BMC's coffers, being scrapped in Mumbai.
"It is true that in the world, only Ethiopia and Mumbai have octroi," said Mungantiwar, adding that the state would incorporate provisions for civic bodies being compensated for revenue losses. The state is planning to pay the compensation three months in advance with provisions in this regard being incorporated in the GST bill to be tabled before the legislature in the coming winter session.
Noting that Mumbai had importance on not just the national but the global map, Mungantiwar said they would take care to ensure that municipal bodies did not have to look to the state or central governments for funds. "As the finance minister of Maharashtra, I will use my strength to ensure that not even a rupee is lost," he said, while denying contentions that the onset of GST would lead to a rise in inflation as around 52% of commodities in the consumer price index (CPI) were exempted from tax.
Mungantiwar said Maharashtra would be the ninth state after Assam, Bihar, Jharkhand, Chhatisgarh, Delhi, Gujarat and Madhya Pradesh to ratify the Constitution (122nd Amendment) bill, 2014 and added that the GST regime would ensure that India would be one market. Describing this "as the most important economic reform", Mungantiwar said this would cut down on massive competition between states and merge a bouquet of 17 indirect taxes into one, reward honest tax payers and nab evaders.
The Shiv Sena's Sunil Prabhu pointed out that the BMC would stand to lose in terms of funds for capital works after octroi was abolished. Pointing out that compensation for revenue losses was likely to be in place for just five years, Prabhu questioned how the civic bodies would be compensated later and stressed on the need to keep their economic independence intact.
Leader of the opposition Radhakrishna Vikhe Patil said that the BJP, during its years in the opposition, had opposed the original concept of the GST floated by the Congress and claimed credit for his party for the idea of the legislation. Former finance minister and NCP group leader in the state assembly Jayant Patil said while the principle of "one nation, one tax" was important, the Centre would stand to gain more than states, who would see their leeway being reduced.
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