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VAT in BJP states after Bihar polls

October 28, 2005 01:32 IST

Bharatiya Janata Party-ruled states seem all set to implement the Value Added Tax regime in their states after the completion of Bihar elections.

According to top sources in the BJP, the state chief ministers are to be summoned for a meeting on this issue by party president Lal Kishenchand Advani, and the decision to implement VAT is likely to be taken then.

Significantly, BJP-ruled Jharkhand, is already in the process of implementing the system and another BJP-ruled state Rajasthan is also taking steps for its implementation.

According to a senior leader in the party, the BJP's refusal to let states ruled by its party implement the VAT was more of a political move than motivated by any policy level objections.

"Uttar Pradesh has refused to implement VAT and we could not risk losing our traders' base there to the Samajwadi Party," said the leader. BJP leader V K Malhotra is on record as having said that Uttar Pradesh shared borders with BJP-ruled states like Madhya Pradesh and Rajasthan, and therefore it was unfair to these states that UP should have lower taxes due to non implementation of VAT.

In fact, state traders' union leader Shyam Bihari Mishra, who is also an old Sangh loyalist, had met Advani and urged him to adopt the earlier BJP policy of advocating VAT. The system was a pet project of the previous National Democratic Alliance regime and several people were surprised by the BJP's decision to oppose its implementation.

Later, several BJP chief ministers including Gujarat Chief Minister Narendra Modi and Madhya Pradesh Chief Minister Babulal Gaur had started mounting pressure on the BJP leadership to reverse its stand. "It was observed that states which implemented VAT had better revenue collection figures than those which had not implemented VAT," said Gaur.

The BJP admitted in its national executive in Chennai that the party would reconsider its decision on VAT shortly. "The chief ministers' meeting should see some forward movement on that," said a source.

Nistula Hebbar in New Delhi
Source: