The Hindu Business Line : Common economic market pact between States necessary: BCCI

Advertisement

Mumbai Feb. 21 The Centre and the State must get together and agree on uniform tax and subsidy policies across States, recommends the Bombay Chamber of Commerce and Industry.

Differential rates of taxation and duties, discounts in charges for facilities such as water supply and power provided by various States to serve as incentives to attract investments have led to distortion in investment patterns, says a report from the Chamber.

The different rates of stamp duties on transactions have led to corporates moving their registered offices and production units to States with lower stamp duties, weighing against locational advantages, it said.

There are central sales tax and inter-state differences in physical and fiscal barriers to trade, it said.

Octroi, entry taxes, in fact, the sheer multiplicity of taxes have led to the cascading effect of taxes and malpractices such as black marketing, corruption, interstate smuggling and re-routing of commodities through tax havens, which in turn have led to increase in transactions costs thereby creating market distortions.

According to the Chamber, States must work towards a voluntary agreement (`The Indian Common Economic Market Agreement') to introduce uniformity in these matters.

Economic unity is enshrined in the Indian Constitution, said Mr Nihal Kothari, Special Advisor (taxation policy) to the Management Committee of the Chamber, at a news conference on Wednesday.

Article 301 says that "trade and commerce throughout the territory of India shall be free," said Mr Kothari.

But the Chamber would rather that this was made to work through common consensus and agreement among the States rather than legislation, said Mr Ajit Ranade, Special Advisor (economic policy) to the Managing Committee of the Chamber. (Imposition might provoke resistance, was the general suggestion.)

This was how VAT was introduced in the country, it did not seek to take away the power of the State to levy laws, he said.

Speedy implementation of nation-wide Goods and Services Tax will eliminate distortions, said the Chamber.

More Stories on : Taxation | Industry Associations | Maharashtra

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page