Southern States - Karnataka-Bangalore   

Govt. criticised for failing to create awareness about VAT

By Our Special Correspondent

Bangalore March 24. Opposition members in the Legislative Assembly today welcomed the changeover to the system of Value-added Taxation (VAT), but expressed the view that the Government should have done the spadework for the introduction of the new tax regime.

They were participating in the inconclusive discussion on the Karnataka Value-added Tax Bill, 2003 which was taken up today.

They were of the view that the Government should have educated the people, in general, and the traders, in particular, about VAT before changing over to the new system.

Initiating the discussion, the BJP member, Vishveshvar Hegde, criticised the Government for failing to introduce the Bill in the last session of the House. The Bill should have preceded the announcement of the introduction of VAT. He demanded that the Government place on the table of the House the report on the pros and cons of VAT submitted by the former Deputy Chief Minister, Siddaramaiah, after a tour of some of the countries which had adopted VAT. He had taken with him a group of officials. The Government should have prepared the people to accept VAT instead of seeking the hurried passage of the Bill.

The Law and Parliamentary Affairs Minister, D.B. Chandre Gowda, noted that the Bill was introduced on March 11. Piloting the Bill, he said that France was the first to adopt VAT in 1952. Today 110 countries had adopted it. The decision to introduce it in the country was taken in 1999 at a conference of the finance ministers of the States. The introduction of VAT from April 1 had become imperative as the Union Budget for next year had made the announcement in that regard.

Mr. Vishveshvar Hegde said the delay in introducing the Bill had caused inconvenience and confusion among the traders. Section 52 of the Bill, dealing with inspection of documents, viewed all businessmen with suspicion. He criticised the levy of VAT even on mangalasutras which were sacred to Hindu women. He criticised the levy of VAT on commodities such as rice, atta, bread, and Ayurvedic medicines. He wondered how the Commercial Taxes Department would deal with those who were casual traders and organised discount sale melas. As the traders needed at least one year to adjust themselves to the new system, the Government should hold in abeyance the sections in the Bill which provided for punishment and penalties.

B.N. Bachche Gowda (JD-U) also expressed the view that the people should have been educated about VAT. He hoped that the new tax system would not be abused by unscrupulous traders to the detriment of consumers. The Bill should be discussed at length as the introduction of VAT would lead to a revenue loss of Rs. 750 crore in the first year.

C. Byre Gowda (JD-U) criticised the levy of the tax on agricultural inputs such as fertilizers and implements and agricultural and processed food products. The Janata Dal Government had reduced the sales tax and entry tax on fertilizers, he said.

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