Bhubaneswar, March 30: Traders across the state today decided to go on strike from April 1 as the talks with the state government on the issue of withdrawing Value Added Tax (VAT) on essential commodities failed.
The traders, now on a war path, would stop procuring the essential commodities from the day the strike begins.
Negotiations to resolve the issue were held today - for the second time this week - under the chairmanship of finance minister Pradeep Amat. However, it did not yield any results with both the sides remaining adamant.
Secretary of the All Odisha Traders' Association Sudhakar Panda said: "The state government is not at all interested in resolving the issue. As many as 24 states have exempted essential commodities from VAT. Odisha must simplify its tax system."
Panda said: "We are going on strike from April 1."
He said that during the association's first meeting with the government on March 26, the state had agreed to reduce VAT from existing 5 per cent to 1 per cent. "They even assured us to discuss the downsizing of VAT on wheat and wheat products. But, no discussion was held," said Panda.
"There should be uniform tax structure as in other states," Panda had said earlier.
He claimed that traders had to pay nearly 10 to 12 per cent as tax in various forms on the essential commodities. "During the procurement, we bear transport cost of nearly 5 to 7 per cent. In addition to that, the traders are also paying 5 per cent VAT on these products."
The traders are of the view that if the state government reduces VAT and brings about a uniform tax structure, it would be able to earn more revenue. "There will be no pilferage of taxes. The smalls-scale traders will also come forward to pay taxes," said the association secretary.
Sources in the finance department said the state government was getting nearly Rs 14,500 crore revenue as VAT on the essential commodities.
"When there is a constant pressure on the tax net of the state how can we meet their demand at this moment? The tax on dal, sugar and other products has been imposed for years together. We will not be able to waive off the tax at the moment," said a senior official.
The officials also argued that Odisha should not be compared to other states.
"While the state is imposing 26 per cent VAT on petroleum products, other states are imposing more than 30 per cent VAT on these products. It has an impact on the prices of essential commodities in the state," he said, adding that the traders should not compel the government to reduce VAT on the essential items.
Food supplies and consumer welfare minister Sanjay Das Burma said: "We are aware of their demands. As the assembly session is on, we are not able to come to a conclusion. We will hold another round of discussion after the budget session of the Assembly is over."
The general apprehension is that the price of dal and other products will shoot up from April 1 onwards.
The state consumes about 67,000 metric tonnes (MT) of pulses and 12,000MT of wheat and wheat products every month. But, a major chunk of these products is procured from other states.
Sources said the government was examining the financial implications if it withdrew the VAT from the essential commodities, from which it earns around Rs 14,500 crore yearly.
The Centre is also thinking of bringing in a uniform tax structure.
