With the Maharashtra government all set to scrap the local body tax (LBT), the substitutes are likely to put an additional burden on taxpayers. The government is considering allowing municipal corporations to increase the taxes on civic services, such as water supply and sewerage system.
After finance minister Sudhir Mungantiwar announced, in his maiden budget on Wednesday, to scrap the LBT in the state from August 1, the government has started looking for alternative to replace the method of revenue generation being used in 25 civic bodies across the state.
Several municipal corporations, such as Mira-Bhayandar and Pune, had witnessed a significant rise in revenue after LBT was introduced. Its scrapping is likely to hit their income hard.
The corporations have now approached the government for help. “Invoking our powers under the Municipal Corporation Act, we can allow the corporations to increase the water taxes and levy sewerage taxes,” an official from Mantralaya said.
“In some of the corporations, the water taxes are lesser than in gram panchayat areas. We do not have sewerage taxes in many of the corporations. They can make up for their losses by revising these taxes,” he said.
The official also hinted at the rise in the taxes in municipal corporations. “The surcharge of about 1% on VAT is expected to be an additional burden on residents in parts of the state. The immediate rise in property tax rate in Mumbai was nothing but an example of it,” he added.
Mungantiwar, however, claimed there would be no hike in the taxes. “The alternative we are bringing in for LBT will replace the taxes in the existing regime and is not expected to be a burden. In Mumbai, too, we are working out an option to ensure there is no extra burden of taxes or double taxation on residents,” he told HT.
Mohan Gurnani, president, Federation of Associations of Maharashtra, said: “The alternative system will bring uniformity across the state, without putting any additional burden on tax payers.”
He, however, claimed the traders were upset over the decision of scrapping LBT from August 1, when the BJP had promised to revoke it immediately after assuming power.