NEW DELHI: The Bharatiya Janata Party decided on Monday to reverse its earlier directive to State Governments ruled by it not to join the Value Added Tax regime. A statement issued after a one-day meeting of Chief Ministers of BJP-ruled States declared, "In principle BJP-ruled States will adopt VAT."

The Chief Ministers of five BJP-ruled States — Narendra Modi of Gujarat, Shivraj Singh Chauhan of Madhya Pradesh, Vasundhara Raje of Rajasthan, Raman Singh of Chhattisgarh and Arjun Munda of Jharkhand — would meet again on December 15 a day ahead of the empowered committee meeting where they would air their concerns.

Senior BJP leader Jaswant Singh told reporters after the Chief Ministers' meeting that the party recognised that VAT was a "progressive tax system" that the National Democratic Alliance had itself proposed. The party's concerns were related to small traders' difficulties, a road map for the elimination of Central sales tax, and need for clarification on compensation to States in the event of a shortfall in revenue collection.

On an average States have seen revenues increase by roughly 15 per cent as a result of VAT, sometimes going up to more than 25 per cent in some States. There has been considerable pressure from party Chief Ministers on the central leadership to join the VAT regime. It was after the NDA lost the 2004 Lok Sabha election that the BJP leadership directed States ruled by it not to join the new tax regime.

Mr. Singh admitted that some BJP-ruled States were keen to join the VAT regime as early as next month, but added that he would not like to "differentiate" between one and the other by naming the States. The effort, he hinted, was towards clearing the path for all BJP-ruled States to join the VAT regime latest by the next fiscal year starting April 2006.

The main difficulty appears to be for tribal States such as Chhattisgarh and Jharkhand where consumption is low and mining is one of the main economic activities.

There were issues related to Central sales tax on coal and minerals.

The party also decided that all States ruled by it would strengthen laws enforcing slaughter of cows, bulls and calves.

However, in States where it is a coalition partner, as in Bihar, the BJP would work out a stand in cooperation with the ruling partner.

Mr. Singh made it clear that the party would not force its decision on its alliance partners.

Illegal migrants

On the subject of illegal migrants coming into the country, Mr. Singh said BJP-ruled States would work out a system of detection and deportation. Yet another subject that came up for discussion was naxalism.

The party criticised the Centre's handling of naxal violence; charged it with not taking the issue seriously and "compromising" with naxalism for electoral gains; and finally said that a joint memorandum on what needed to be done would be given to the Prime Minister by the BJP Chief Ministers.

Party president L.K. Advani addressed the meeting. The former Prime Minister, Atal Bihari Vajpayee, underlined the importance of setting up a grievance redress mechanism in the States.

The conclave was partly hijacked by the expose in camera of MPs, including six from the BJP, accepting cash for asking questions in Parliament.

Mr. Advani told reporters that disciplinary action was being taken against those party MPs allegedly involved.

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