Will the introduction of the goods and services tax (GST), which would in turn mean abolition of octroi, affect the functioning of the Mumbai civic body?
The state government is mulling an amendment to the law to ensure the compensation towards the loss of octroi collected by the Brihanmumbai Municipal Corporation (BMC) is safeguarded and comes directly to the civic body. The BMC gets more than Rs7,000 crore or more than 30% of its revenue through Octroi, the tax on goods entering the city.
Chief minister Devendra Fadnavis on Monday clarified the GST would not impact the autonomy of the state and the BMC. The CM said all apprehensions related to the autonomy of Maharashtra and BMC or other local bodies should be removed as the Centre has devised a mechanism that will allow the states to get its own share automatically and electronically.
“An institutional mechanism will be devised on the lines of the Centre, so the devolution of funds can be made directly to all local bodies. This will be done by making an amendment to the state GST law or by bringing in a separate bill altogether,” Fadnavis said.
While supporting the resolution to ratify the constitutional amendment enabling the rollout of the GST in the state legislature on Monday, the opposition and the ruling ally Shiv Sena claimed the civic body of the financial capital may get crippled owing to its dependence on the Centre and state for compensation. The leaders were worried about the delay in the release of the funds if the state and the civic body are ruled by two different parties.
“The civic body is able to provide transport, water and educational services at a subsidized rate to about 1.5 crore people because of octroi collection. The new proposed regime has created an ambiguity over the source of revenue for the BMC. It could impact the capital expenditure. Not just compensation, but the annual growth in octroi collection, too, should be taken care of by the government,” said Shiv Sena’s Sunil Prabhu, while participating on the debate during the special session on the legislature.
Prabhu also said the octroi checkposts are a great source of checking the vehicles entering the city. “The possibility of explosives sneaking into the city are high if there are no checkposts,” he said.
“We want an assurance from the state that the funds would be directly transferred to the local bodies and not rotated through a consolidated fund of the Centre,” Sena legislator Neelam Gorhe said, in the council.
Congress leader and former chief minister Prithviraj Chavan said there was no assurance from the Centre over compensation for the loss of revenue. He said the loss should be directly credited in the kitty of the civic body instead of its devolution through the state government.
Radhakrishna Vikhe-Patil, leader of Opposition in the Assembly, said the government has failed to regularly credit the compensation of scrapped LBT to municipal corporations and GST may meet similar fate.
Finance minister Sudhir Mungantiwar said the government was mulling a bill to ensure the share of compensation was legally safeguarded. “It is not possible to ask the Centre to directly devolve the share to the BMC as the Centre has taken the responsibility for the first five years. The amendment to the laws falls within the purview of the state. We will ensure timely devolution of the funds,” he said.