New Delhi, Jan 5: The Government today indicated that it may rethink the issue of uniform floor rates for sales taxes in states, after a widespread furor over the sharp hike in tax rates. After another round of discussions with chief ministers, floor rates on computers, milk products, tea, coffee and electrical goods may be lowered to 4 per cent from the new rates of 8 per cent. Those on white goods like TVs and VCRs and washing machines may be lowered to 8 per cent from the floor rate of 12 per cent.A decision to this effect is likely to be taken after the Standing Committee of State Finance Ministers meets in the Capital on January 10. The meeting is to review the whole exercise. It will also be the new cut-off date for states and UTs which have till date not issued notification in this regard.Apart from various consumer groups, the Federation of Indian Chambers of Commerce and Industry (FICCI) today protested against the sharp hike in sales taxes by various states over the past few days. The Delhigovernment, which has already stated that it does not want to implement the floor rates, is meeting Finance Minister Yashwant Sinha on the 10th while the Central government has no powers over the states on sales tax rates, as far as Delhi is concerned, the government can issue an ordinance to make it hike rates.Over the last few days, several states have hiked their sales taxes to bring them in line with the floor rates on motor vehicles, petrol, etc, but have not lowered tax rates on items where they were higher than the floor rates.Prices of the Maruti 800, for instance, have gone up by Rs 16,100 in Gujarat following a hike in sales taxes from 4 per cent to the floor rate of 12 per cent. Prices of petrol have gone up by Rs 2.42 a litre in Calcutta with sales taxes more than doubling, but prices of cooking gas have remained the same with the state government not reducing the sales tax of 17.25 per cent on LPG.Sources in the finance ministry said there would be no lowering on floor rates of salestaxes for liquor and petroleum products, where the floor rate is of 20 per cent. Similarly, the floor rate of 12 per cent for dry fruits will remain intact, sources said.Sources said that the reason for bringing about the changes was to bring about further rationalisation. ``The whole exercise is to rationalise sales tax structure and it is an on-going process. Whenever, it is felt that a particular commodity is of mass consumption and its sales tax needs to be further rationalised, the Standing Committee will review the floor rates,'' sources said.Since the policy is to have floor rates, meaning that taxes on any particular commodity will not be lower than it, states are free to have a higher tax rate.But Finance Ministry officials are confident that competition will eventually make all states agree to a common rate. ``If a particular state has a higher rate than its neighbouring state, it will lose business. States cannot undercut each other since they cannot go below the floor rates,'' sourcessaid.FICCI president G P Goenka said that industry was shocked with the manner in which the uniform sales tax policy has been implemented. While states have increased rates wherever they were lower than the proposed floor rates, they have not reduced taxes on items where they are higher than the floor rates. In West Bengal, for instance, LPG and Coffee taxes are 17.25 per cent and those on chocolates are 19.55 per cent.
