Guwahati, July 7: The Assam government, which is facing flak for increasing VAT on 131 items, today got into damage-control mode by promising tax cuts on various essential items in the budget to bring relief to the common man.
"I can't disclose the proposals at this moment but I can tell that we are going to slash taxes on various items of daily use in the budget," state finance minister Himanta Biswa Sarma said here today.
The budget will be tabled in the Assembly later this month.
Effigies of chief minister Sarbananda Sonowal were burnt at many places yesterday by different organisations to protest against the hike in VAT on essential items and rise in prices of LPG, petrol and diesel.
Apart from increasing the VAT on 131 items from five to six per cent, the state government has also withdrawn partial exemption granted to oil companies on the sale of LPG for domestic use in Assam, which will result in an increase of Rs 14 on the price of each LPG cylinder.
The petrol price has been increased by 76 paise and diesel by Rs 1.67 per litre. Sarma, however, sought to dispel fears that the latest hike will lead to price rise.
"The items on which the tax rate has been marginally increased are governed by the maximum retail price (MRP) system. A one per cent increase in tax rate will not cause any increase in price as the consumer will continue to pay the same MRP. Hence, it will not put any additional tax burden on the consumer," he said.
"It is a fact that in the MRP fixed by a manufacturer there always remains a margin to absorb any moderate tax hike so the latest increase will not create any inflationary impact on the common man as the MRP of these goods remains unchanged," Sarma said.
He said the state government has constituted a district-level task force comprising the deputy commissioner, superintendent of taxes and deputy superintendent of food and civil supplies department to ensure that no unscrupulous trader can increase the price of any commodity by giving the excuse of the tax hike.
Sarma said the government had to go for moderate tax hike out of necessity since the state is facing a grim financial situation.
"We inherited financial liabilities to the tune of Rs 12,000 crore from the previous Congress government. Initially, we thought the liabilities will be around Rs 10,000 crore. Therefore, the white paper on the state's finances which we had submitted in the Assembly last month will have to be updated in the coming budget," he said. He hit back at former chief minister Tarun Gogoi for criticising the state government over the VAT hike, saying the former government had increased taxes by three per cent in 2013 and hence he has no moral right to criticise the BJP-led government.
Sarma said the Centre has assured Assam on payment of oil royalty of Rs 1,400 crore due since January 1, 2014, so it can tide over the financial crisis. "Tomorrow, Union finance minister Arun Jaitley will meet top officials of the state finance, planning and development departments on the financial condition of Assam and efforts will be made to find ways to resuscitate the finances," he said.
