Unwilling to let go of an opportunity to rake in big bucks, wholesale traders have decided to stay open on Akshaya Tritiya and resume their indefinite stir over the implementation of the local body tax (LBT) from Wednesday.
Mumbaiites are unlikely to be badly hit as retailers, who kept their shops closed for six days last week, will not participate in the strike.
The recent fall in gold prices and the occasion of Akshaya Tritiya is expected to increase jewellery sales by up to 40% on Monday.
“In view of the festival, we have asked all traders to keep their shops open for three days,” said Mohan Gurnani from the Federation of Associations of Maharashtra (FAM). “Traders should pay only 5% of VAT till LBT is abolished.”
The wholesalers are also planning a jail bharo andolan on Thursday. “More than one lakh traders will participate,” Gurnani said.
“We have decided to open the shops, but continue our protest by not registering for LBT,” said Viren Shah, president, Federation of Retail Traders Welfare Association, which plans to form a panel to hold talks with the government.
Gold shops in Pune are, however, likely to stay shut on Monday.
There’s one good reason why the civic body and the state government have ignored the traders’ protests against the implementation of local body tax (LBT) – traders contribute only 10% to 12 % to the octroi kitty.
Octroi is the Brihanmumbai Municipal Corporation’s largest revenue source, and sources in the BMC said the traders’ contribution to LBT, which is expected to replace octroi from October, will remain similarly marginal.
Octroi fetches the BMC close to Rs7,000 crore every year. Figures with the BMC show that a sizeable chunk of octroi — 38% to 39% — comes from crude oil.
Another 45% to 50% come from major companies and industrial giants, including Fast Moving Consumer Goods (FMCG) manufacturers who import in bulk, and pay the tax unfailingly.
It’s only the remaining 10% to 12% that comes from smaller traders and wholesalers.
“Our income from crude oil and the major corporates is fixed, no matter what. And these two categories of octroi payers have expressed their happiness with our plan to replace octroi with LBT,” said an officer from the BMC’s assessment and collection department, requesting anonymity.
Another reason that traders are not being taken seriously is because they are among those who evade paying the tax.
“These figures indicate a very high rate of evasion by smaller traders. So, once the LBT kicks in, the BMC’s income is only bound to increase as LBT will reduce evasion,” said Utsal Karani, a Juhu-based activist.
LBT is an account bookbased taxation system that has the provision for audit, which could reduce evasion.
“The income from smaller traders and merchants is never fixed as it depends on how strict our implementation is. If we are not strict, this is the category where evasion is the highest,” confirmed a senior civic official, on condition of anonymity. “A major chunk of LBT is assured, so even if a small section of the payers oppose us, it will not impact our income much.”