The Telegraph
Since 1st March, 1999
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BJP doublespeak on value-added tax

New Delhi, April 9: The BJP leadership has told its MPs that it will go ahead with VAT. However, the party has made it clear that it is not averse to letting local units of the BJP derive political mileage by taking an anti-VAT stand.

The two-pronged strategy was decided over the last few days after a series of meetings between finance minister Jaswant Singh and party leaders. Singh made it clear that if VAT is not implemented, his budget figures may not work out. Hence, he was asked by the Prime Minister to do all in his power to make VAT a success.

However, the second and populist prong in the strategy has also been unleashed. Today, BJP MPs joined other parties — both in the ruling NDA and in the Opposition in Lok Sabha in demanding the scrapping of VAT.

“Vat wapas lo (withdraw VAT),” shouted members cutting across party lines during the zero hour.

Dissatisfied with the assurance given by textiles minister Kanshi Ram Rana that he would convey the feelings of members to Singh, angry Opposition members from Samajwadi Party, AIADMK, Congress and RJD stormed the well, forcing the house to be adjourned.

“Delhi will never accept VAT. I have been always against it right from the beginning,” BJP MP Madan Lal Khurana said.

Congress suggested VAT should be kept in abeyance for a year while the parliamentary committees look into the matter, even as several MPs pressed for discussion on the issue. Although Tamil Nadu has decided to go ahead with VAT from June 1, AIADMK MPs in Lok Sabha spoke out against the move.

Singh, however, continued with his quiet diplomacy to see to it that VAT succeeds and will be using his influence over state politicians to see they do not waver from their commitment to bring in VAT by June 1.

BJP MPs in north India, where it has turned into a major issue, however, have been told to sell the message that the BJP-led government was an “innocent” bystander in the entire issue as this was really a state issue and states alone took all decisions on bringing in or delaying VAT.

Singh as well as taxation experts believe that once the majority of states bring in VAT, states opting to stay out of the system will be losers and consequently forced to follow suit.

State economies are dependent on new industries coming up and finance ministry studies say that without the benefit of tax set-offs, which are an integral part of VAT, manufacturers will be loath to set up units in any state when competing states offer such benefits.

VAT allows manufacturers and distributors to claim tax credit for taxes paid anywhere in the country on any raw materials used in making the finished products finally assembled and sold by them.

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