VAT Will Lower The General Price Level In A Meaningful Way

B Prasant

FOLLOWING the clarification of the Bengal unit of the CPI(M) on the positive nature of impact of the Value Added Tax or VAT, the Bengal Left Front government has come forward with a detailed analysis of the positive nature of the new tax, which as virtually a single-window tax regimen replaces a whole range of taxes that the trader was expected to pay earlier.

In a statement issued in Kolkata, finance minister of the LF government, and convener of the Empowered Committee of the state finance ministers in the matter of VAT, Dr Asim Dasgupta said that the 17 articles that had been brought under the VAT regimen would have falling price levels.  He rebutted the preposterous claim of a section of the traders, who were being backed by a segment of the corporate media led by the Ananda Bazaar Patrika group, that the tax incidence on the 17 articles of daily use would be more than it had been in the past.  The table below clarifies the position on tax incidence.

It is very important to note that under sales tax, there were tax regimens for raw materials that were used to make the finished product.  VAT is a single-point tax.  Thus, the tax incidence would be lowered, as would be the price that the consumers and end-users would have to pay.  In addition, these 17 items represent 90 per cent of the articles of common consumption by common people, in Bengal and elsewhere in the country.

Rebutting the canard being spread about the increasing incidence of taxes in the construction materials making development work more costly, and on household items like cooking gas and soap, Dr Asim Dasgupta cited some cogent examples as summarised in the table below.

Dr Dasgupta pointed out that the VAT brought a degree of unprecedented transparency in the tax regimen. It is also very difficult to evade VAT. The introduction of VAT would, for these two reasons alone, increase the state’s revenue and the additionally mobilised of resources could be utilised for developmental purposes in a wider manner than before.  He asked the traders to immediately end the strike being observed by them.  Simply put, the two issues around which the ongoing strike is orchestrated, i.e., VAT would increase prices and harass the traders, have no viable basis.

ANTI-VAT STRIKE FIZZLES OUT

The call for downing shutters for ten days against the imposition of the VAT has quickly sputtered out in Bengal. A section of the traders had given the call for a strike of the wholesale market and the traders themselves would not respond even remotely in a manner that some of the traders’ organisations expected them to.

Isolated and desperate, the traders’ body that had called for the strike and that enjoys patronage of the Pradesh Congress and the BJP started to organise provocations against shop owners who would not down shutters.  The latest incident that was replete with violence occurred on April 23 at Metiabruz.

Every week, over the weekend, a market is run on the sidewalks of the Acra Road and the place is on the point where three wards, 137,138, and 139, join.  This weekend was no exception and people thronged to make their purchases.

At around eight in the morning of Saturday, April 23, around two-dozen musclemen owing allegiance to the Pradesh Congress gathered near the market.  Congress activists like former MLA Fazle Alam Mollah, Abdul Khaliq, and Shamim Ansari led them.

They started by blackguarding the decision of the Bengal Left Front government to implement the VAT and then went on to hurl abuses not only against state finance minister, Dr Asim Dasgupta but also against the traders’ bodies supporting the VAT. 

Very soon, these worthies started to throw stones at the market and proceeded to torch motorcycles belonging to the shopkeepers.  They also beat up a few of the shopkeepers.  They also threatened the people who had come to make purchases at the market.

Ultimately, the police had to intervene.  Shots had to be fired in the air to disperse the anti-socials and Abdul Khaliq was taken into custody.  The local CPI (M) councillors accompanied by Kolkata district secretariat member of the CPI (M), Dilip Sen rushed to the spot and ensured that the enraged shopkeepers and the local people did not retaliate in kind to the attacks on them by the Congress goons.  Sen later said that the assault by the Congress was part of a plan to cause disruption on the eve of the elections scheduled for the Kolkata Municipal Corporation.