Its a NICE way to growth for north Indian states

Chandigarh, Sept 29 | Updated: Sep 30 2006, 06:42am hrs
Just a day after Prime Minister Manmohan Singh blasted northern states for offering unviable tax benefits to industrial projects, three task forces set up by the PHD Chamber of Commerce and Industry (PHDCCI) have suggested a north India common economy (NICE).

In the report, the task forces said inter-state trade barriers, particularly for movement of agro produce, should be done away with. They also recommended urgent sales tax/Vat reforms. The report has suggested that all state governments should install the tax information exchange system (TINXSYS) by April 1, 2007.

The task forces proposed the setting up a statutory body under Article 307 to enforce tax discipline across all states for achieving a common market.

They advocated removing tax incentives for the industry that could cause distortions.

According to the report, state Vat should be levied at uniform rates - on the basis of destination principles and administrative procedures. States could levy land or property tax to make up revenue losses on account of repealing of entry tax. Motor vehicle taxation should foster development of road transport.

There should be single-point taxation, especially in the case of inter-state traffic. The existing system of granting national permits with endorsement of different states should be abolished and there should be only two categories of permits - inter-state and intra-state. The various taxes may be converged, the report said.