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Business News/ Opinion / Blogs/  Pune Newsletter| Row over local body tax
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Pune Newsletter| Row over local body tax

The traders in Pune were protesting against the imposition of LBT on small traders who did local business and had no brush with octroi till then

Octroi is a major source of revenue for local civic bodies: take the Pune Municipal Corporation which collected Rs. 1,314 crore as octroi in the last fiscal, ended 31 March, which is about 40% of its revenue. So octroi or its new avatar, the LBT, has great importance of the civic bodies. Photo: Mint (Mint)Premium
Octroi is a major source of revenue for local civic bodies: take the Pune Municipal Corporation which collected Rs. 1,314 crore as octroi in the last fiscal, ended 31 March, which is about 40% of its revenue. So octroi or its new avatar, the LBT, has great importance of the civic bodies. Photo: Mint
(Mint)

Pune: The nightmare sight of those idling trucks and their drivers, the vehicles parked haphazardly at the entry point to any major city of Maharashtra, was supposed to have ended from 1 April, when the state abolished octroi and replaced it with the local body tax, or LBT.

Pune, it turns out, chose to be difficult and traders went on strike from 1 April, no April Fool’s Day joke for the citizens, government or even the traders themselves. The traders were protesting against the imposition of LBT on small traders who did local business and had no brush with octroi till then (since somebody else paid it to bring goods into the city).

The week-long stir finally ended, temporarily, it turns out, with the state government adopting a carrot-and-stick approach: the local authorities threatened the imposition of the Essential Commodities Act under which traders would have had to open up. Meanwhile, the chief minister also promised to meet a delegation of traders last Monday, even as he told reporters at a function in Pune that a large majority of traders was likely to be exempted from the purview of the tax.

Now, from 15 April, traders from Pune have racheted up their strategy: beginning Monday, they will stop buying goods, that is stocking up their shelves and from 22 April, take the agitation state wide, through an all-Maharashtra bandh’.

So, what is it about the LBT that has got the traders only from Pune and the Pimpri-Chinchwad belt into agitation mode? Suryakant Pathak, who heads a consumer body, Grahak Panchayat, which also runs a chain of stores in the city, said they want that traders who do local trade should be exempted. Also, the limit for the annual turnover of traders who need to register under the LBT should be raised to Rs. 5 lakh from the current Rs.1 lakh.

“The LBT expects all traders to file returns every six months and keep records for five years. Is that reasonable? It is a burden for small traders who have had nothing to do with octroi all these years: they did not import’ things, their business was all local: like tailors, vegetable sellers and other small businesses run out of the home," Pathak said.

He added, “Even small traders are consumers: they buy from others. All that will happen is that they will pass on the LBT to the end consumer."

But Pune is not the first or only city where LBT has been implemented: why didn’t traders in other cities of the state object? Pathak had an answer to that as well: “None of them has looked at the law. They were happy that now they would not have the (octroi) contractors’ goons harassing and extorting money from them so they paid the LBT!"

He went a step further, saying that legislators who passed the Bill making it a law had not really applied their minds to its provisions: even the corporators of the local civic bodies were not aware of the implications of some of the provisions of the LBT! Octroi has been phased out in some cities over the past two years so it’s not like this is something new or applicable just to Pune.

Octroi is a major source of revenue for local civic bodies: take the Pune Municipal Corporation which collected Rs. 1,314 crore as octroi in the last fiscal, ended 31 March, which is about 40% of its revenue. So octroi or its new avatar, the LBT, has great importance of the civic bodies.

The six-day strike in early April helped nobody: it hit the traders hardest since some 5 lakh traders in the city who do a daily turnover of 1,000-1,500 lost their earnings while fixed costs, in the form of salaries and rentals, continued. Households were put to great inconvenience as the local grocer was shut. Housewives from across the city narrated how they managed: the local grocer who had downed shutters, delivered at home on the basis of a phone call. Or larger stores which had also downed shutters, let customers in from the car park in the basement of the building.

But now with stores not stocking up goods, there is the real fear: even if they are willing to supply goods, they will not have the stocks left! And when the LBT is enforced, as it will in some form or other, it is the end consumer who will have to pay the price, having first been put through the hardship of bandhs. As traders have promised: they will pass the LBT on to the end consumer, you and me.

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Published: 15 Apr 2013, 05:17 PM IST
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