State FMs To Meet In Jan To Decide VATs Fate

Kolkata, Dec 17: | Updated: Dec 18 2003, 05:30am hrs
The empowered committee of state finance ministers for implementation of value-added tax (VAT) would meet in first half of January to decide on the future of VAT in the country, the chairman of the empowered committee and West Bengal finance minister Asim Dasgupta said on Wednesday.

Mr Dasgupta was delivering the keynote address at an interaction seminar with Stanford Center for International Development (SCID), Stanford University, USA. The seminar, entitled Economic Policy Reform Issues, was organised by the Confederation of Indian Industry (CII).

Mr Dasgupta said: At least 10 major Indian states who produce around 70 per cent of the total goods and services in the country are ready to implement VAT. Only after the January meeting, there could be some indication on the possible date of implementation of VAT in the country.

One of the major obstacles for VAT is the attitude of large traders, most of whom are not ready to reveal their sales figures, according to Mr Dasgupta. Once it comes into existence, VAT will benefit all from consumers, traders, manufacturing companies to all the states of the country. It will benefit the states by increasing the tax collection and the traders will be saved from unnecessary interference by tax officials. But it is the large traders who are opposing VAT as some of them will come under income tax net if their sales figures are revealed.

For Roger Noll, professor, SCID, Stanford University, economic reforms are required for business leaders to create entrepreneurs without any institutional barriers.

Mr Noll said that at the state level the reform would have to happen in sectors like electricity, education, health and other infrastructure areas.

According to Planning Commission member NK Singh, the country should have a modern system of taxation covering all goods and services to put to rest the fiscal devil.

The states would have to be actively involved in the reform process, Mr Singh said. This is possible only by acting in concert for what would be a mutually agreed reform policy, he said.