Political opposition both from the ruling party and the main opposition party has emerged close to the implementation of VAT despite an agreement of the Union government with the state finance ministers belonging mainly to the Congress party.
According to a senior BJP leader, this is an election year and no party wants to upset the trading community, but at the same time there are compulsions for widening the tax net. Traders have organised protest in almost all major cities against VAT and the public demonstrations have compelled political parties to take a stand.
In Delhi, the opposition Bhartiya Janta Party has said that it will oppose the implementation of VAT. According to Delhi BJP chief Madan Lal Khurana, VAT would adversely affect the Budget and development of Delhi as sales tax was the main source of income.
Delhi government should discuss with the representatives of commerce to enlist their suggestions and incorporate the suggestions of the trade representatives before finalising the legislation in this regard. As long as trade representatives are not satisfied the present VAT system should not be enforced, Mr Khurana said.
The Congress attitude has been marked by ambivalence. Though Delhi chief minister Shiela Dixit has talked of the a need for a legislation like VAT, she has also registered her opposition to the legislation in its present form to the Union finance minister Jaswant Singh.
On the other hand Kerala chief minister AK Antony has stated that VAT would be implemented.
Support to VAT has also come from the Left-ruled West Bengal and state finance minister Asim Dasgupta had said that the implementation of VAT should clock Rs 500 crore.