Opinion - Letters to the Editor   

ST and the State

Sir, — While the apprehensions voiced in your Editorial' Major issues behind a State tax ' (June 2), on the subject are somewhat valid, the inherent right of a State Government to levy sales tax not on the imports but on the point of first sale and thereafter cannot be questioned. Besides sales, tax, the commodity may also attract octroi or entry tax or any other tax. This is precisely the reason why and the distortions it creates that tax harmonisation throughout the country is important and VAT was a step in that direction. Under the VAT regime, exports are free and imports attract VAT only when value is added. This will be compatible with the broader spirit of the World Trade Organisation though an international treaty has nothing to do with it or cannot dictate it. But, unfortunately, sales tax reform in the form of VAT has been derailed and you have also expressed reservations repeatedly in your Editorials.

G. Sundaram,
Chennai

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