The Hindu : Andhra Pradesh / Hyderabad News : `Reduce VAT on items of mass consumption'

Online edition of India's National Newspaper
Monday, Aug 22, 2005

Andhra Pradesh

Andhra Pradesh - Hyderabad

`Reduce VAT on items of mass consumption'

Special Correspondent

CPI(M) MP writes to Finance Minister Rosaiah

HYDERABAD: Communist Party of India (Marxist) MP Penumalli Madhu has urged Finance Minister K. Rosaiah to reduce the Value-Added Tax imposed on items of mass consumption like coffee, tea and footwear -- chappals -- from the existing 12.5 per cent to 4 per cent in line with other States.

In a letter to the Finance Minister, he said the high taxation was forcing the trade in these items to shift to neighbouring States, besides posing severe hardship to traders. Though the matter was brought to the notice of the former, the Government declined to bring down the rates, saying the increase in tax revenue was a meagre 3 per cent and that any reduction would cause serious disequilibria in tax receipts.

Unconvincing argument

The argument of the Andhra Pradesh Government, however, did not sound fair as the statement of the Union Finance Minister circulated in the Rajya Sabha indicated that different States registered different growth rates after implementing VAT. States with moderate tax structures recorded higher growth in revenues while States with relatively higher tax rates in the previous sales tax regime, registered lesser rates of increase.

In view of this, there was an urgent need to take a re-look into the matter in the interest of the trade and trading community, Mr. Madhu said.

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