On second thoughts

Sir ' The controversy over the purchase of coffins after the Kargil war had seen the Congress projecting George Fernandes as the villain of the piece. Five years later, there seems to have been a sea change in the party's perception of the same man ('Coffingate backfires', April 6). The government led by it has virtually defended Fernandes's actions in the Supreme Court, saying that no rules were violated. Was the entire uproar, then, only a pretence to get even with Fernandes' If this is true, then it is even more disgraceful because the country's defence has been used to settle political scores. Fernandes is not wrong in saying that as a result, many essential defence purchases have been delayed. But perhaps it is too early for Fernandes to rejoice ' he has only been absolved of one set of charges. The dirt dug up by the Tehelka sting operation is still very much in need of clearing.

Yours faithfully,
Paroma Roy, Calcutta

Value it right

Sir ' There has been a lot of protest over VAT. But I wonder how many have a clear idea of what it is. I believe that VAT will reduce prices and also increase transparency in the system. This is because, unlike sales tax, VAT is imposed on only the 'value added' or cost of operation, and not on what has already been taxed previously. Traders too will have to pay less. Another striking feature of VAT is that if the tax is not paid at one level, the next level has to bear it. This discourages evasion as a trader would not like to deal with someone who does not pay taxes, since he would have to bear the burden of that tax himself. The only genuine downside is that VAT means a lot of paperwork and record-keeping; in fact, the cost of increased paperwork could counter the effects of the fall in prices. Of course, these records can also be used to better estimate the value of a business and hence reduce income-tax evasions. All in all, it seems that the transparency being brought into the system is the reason for the protests against VAT.

Yours faithfully,
Shayoni Chakraborty, Calcutta

Sir ' VAT integrates India into a single market, hones our competitiveness and could ultimately bring down taxes by compelling black marketeers to also fall in line. However, VAT needs to be made user friendly. The spirit driving its enforcers should be to encourage compliance by not treating businessmen as criminals. The example of Andhra Pradesh merits emulation. A publicity campaign explaining how VAT actually lowers, and not increases, the prices of medicines, countered the bandh by chemists. The March 2003 VAT amendment limits penalties for defects in documentation to Rs 200 instead of being equal to the value of a consignment. Dealers can correct returns up to 6 months. Only a commissioner can order prosecution. These have helped overcome the fear psychosis among dealers.

Yours faithfully,
N. Narasimhan, Bangalore

Sir ' VAT implementation will increase paperwork and corruption too. Only a simplified system, with single-point tax at the manufacturer's end, can result in better collections at lesser costs and little harassment to tax payers. Unaccounted sales is mostly the result of consumers wanting to avoid paying any additional taxes. Therefore tax at the manufacturing point will mean automatic and voluntary compliance. The experience of textile traders and manufacturers put under Central VAT by the earlier regime shows the difficulties of a chain-system of tax collection because of the corruption in the system in the country.

Yours faithfully,
Subhash Chandra Agrawal, Dariba, Delhi

Sir ' It is only dishonest businessmen who are protesting against VAT because it will be difficult for them to evade paying taxes now. The honest ones are only worried about the complexities and strict penalties. I suggest the government depute tax officials to educate and help businessman comply with VAT norms and maintain accounts.

Yours faithfully,
Govind Das Dujari, Calcutta

Sir ' It is ridiculous that during the higher secondary examinations, most major stationeries shops and food stalls were closed to oppose VAT. This was very hard on the examinees. I know that in a democracy all have equal rights, but traders also have some duties towards students.

Yours faithfully,
Saurik Ginoria, Calcutta

Sir ' I am part of a company exporting goods out of India. According to the VAT rules, an exporter, when buying goods originating in West Bengal, has to pay tax and seek refund of the same from the commercial tax department. If the tax is less than Rs 15,000, then refund will be made after three months from date of application, and if it is more, the refund will be made after a year. The Central sales tax regime is still valid, and so it is more prudent to buy from another state, since no tax needs to be paid. I hope Asim Dasgupta has applied his mind to this, as West Bengal is likely to lose out on large purchases made by exporters.

Yours faithfully,
Rabindra Singh, Calcutta

Sir ' A commercial on air currently shows television actors singing the virtues of VAT ' 'Aya aya Vat aya'. Governments must educate the public through the media. But using actors to convince traders about as serious a matter as the new tax system, and that, too, with the help of jingles, is ridiculous. No matter whose face is shown in such advertisements, the treatment has to be serious and the logic of the message should appeal to the rational mind.

Yours faithfully,
Beena S. Naik, Margao