State govt may abolish octroi in the next 2 years

The civic body’s finances are in for a jolt.

Senior civic officials have said that the state government has indicated its plans of abolishing octroi by April 2014 and bringing in the goods and services tax (GST).

It is learned that chief minister Prithviraj Chavan has even convened a meeting with heads of various municipal corporations across the state, including Mumbai.

Octroi is the highest income churner for the civic body, contributing nearly 35% of the total income.

This means, the Brihanmumbai Mumbai Corporation (BMC) will now have to look for other options for generating as much income, a move that will mean more taxes for the citizens.

On October 21, HT had reported how taxes were likely to go on an upward swing as the civic body had started contemplating a revision of existing taxes as well as an addition of new ones.

Of the many alternatives being considered by the BMC is a yearly increase in your water taxes, up to 8%.

In addition, the civic body is also contemplating the imposition of a tax on waste collection, as mandated by the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), which makes it imperative for a local body to tax citizens for every service that it provides.

The civic body might also review an old, but controversial, proposal to tax every slum structure in the city, irrespective of its legal status.

Said a senior civic official, not wishing to be named, “We have to look at a drastic increase in taxes. Even as octroi goes, we will be forced to spend nearly Rs. 10,000 crore for building the Gargai and Pinjal dams. The operation and maintenance cost of our water supply system is bound to rise, which will then result in an increase in production cost of water.”

The BMC has also asked the Mumbai university’s economics department to conduct a study and suggest alternative sources of income that it can explore. Sources said the study is yet to begin.

BMC chief Sitaram Kunte said that talks were on in the matter, but nothing had been finalised so far.


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