CHENNAI: Tamil Nadu has joined the majority of the States in implementing the value added tax (VAT).

The Assembly on Tuesday adopted the Bill by a voice vote, after All-India Anna Dravida Munnetra Kazhagam MLAs staged a walkout.

Assuring the members that the State would protect the interest of traders and consumers while implementing the new system, Minister for Commercial Taxes S.N.M. Ubayadullah, in his reply to the debate, said traders whose annual turnover was less than Rs. 10 lakh had been exempted from VAT registration. Those with an annual turnover between Rs. 10 lakh and Rs. 50 lakh could opt for a compounding tax not exceeding one per cent.

Stressing the need for VAT, he said the State could not lag behind others. The previous AIADMK regime had agreed to implement VAT, but did not do so. By introducing VAT, the State's anticipated loss for the current financial year would be Rs. 490 crore. The Centre would compensate 75 per cent (i.e. about Rs. 375 crore).

AIADMK's objection

Opposing the introduction of VAT, AIADMK member S.V.Shanmugham, who was Commerce Minister in the previous AIADMK Ministry, warned that by adopting the new system the State would be deprived of its major revenue source. In the last two years tax revenue in the State had increased substantially while it had plummeted in States where VAT was in force.

Mr. Shanmugham said introduction of VAT would lead to sharp increase in price of essential commodities. As traders were stoutly opposing VAT, he wanted the Government to have a thorough discussion with them and arrive at a consensus before introducing it.

In his brief intervention, Electricity Minister Arcot Veerasami quoted previous AIADMK Finance Minister C.Ponniyan's budget speech justifying VAT.

Welcoming the decision, Congress party whip S. Peter Alphonse said the previous government's failure to implement VAT had led to many manufacturing units shifting to other States. VAT would help manufacturers in the State to compete globally. Except Uttar Pradesh and Puducherry all States and Union Territories had implemented VAT.

G.K.Mani of the Pattali Makkal Katchi wanted the State Government to take necessary steps for abolishing online trading which, he claimed, was responsible for increase in price of essential commodities.

The AIADMK members staged the walkout protesting against the Speaker's refusal to allow Mr. S.V. Shanmugham to reply to "charges" levelled by Mr. Peter Alphonse.

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