The Shiv Sena has decided to vote in favour of the Goods and Services Tax (GST) in the state legislative assembly on August 29, albeit with a condition that the Centre should provide a Rs 37,500-crore package for abolition of octroi in the next five years.
“We have decided to support the GST. We will surely pave the way for its smooth passage in the assembly. But we have also imposed a condition that the Centre should entirely compensate the revenue loss through octroi following implementation of the GST,” senior Shiv Sena leader and Industries Minister Subash Desai told The Indian Express.
Shiv Sena president Uddhav Thackeray has already discussed the matter with Chief Minister Devendra Fadnavis, who has conveyed the Sena’s concern to Union Finance Minister Arun Jaitley. The Centre has assured to provide a suitable financial package to Maharashtra to override the revenue loss following the implementation of GST.
The state government has convened a one-day special session of the assembly to discuss and pass the GST Bill on August 29 as part of the process to ratify the central GST Act which mandates support from state assemblies.
The Shiv Sena, which is an alliance partner of the ruling BJP, had vehemently opposed the GST till last month. The Sena’s argument was GST could thwart development work in Mumbai. “At the outset, we are not opposed to the GST. Our primary concern was to address fears of revenue loss to the Brihanmumbai Municipal Corporation (BMC). That’s why we have urged the Centre to give us an assured financial package for the next five years,” said Desai.
The BMC is the richest civic body of India with an annual budget of Rs 35,000 crore. A sizeable component of Rs 7,500 crore is mobilised through octroi collection in Mumbai.
According to the state finance department, the revenue loss across the state works out to Rs 18,000 to Rs 20,000 crore. But the chief minister has urged the Centre to enhance the allocations for the state, which contributes 40 per cent of tax revenue collections to the Centre.
The state government has also indicated that a legal provision in the proposed GST Bill to facilitate compensation equivalent to octroi has been considered. Interestingly, the BMC is the only civic body where octroi is still in existence.
The Congress-NCP, which supported the GST at the Centre, will do the same in Maharashtra when it is taken up for voting. Former NCP finance minister Jayant Patil said, “We will definitely support the GST. But we have to see the details of the GST Bill which would be proposed by the state government. Issues related to revenue compensation for the state would be one aspect which would be debated.”