The Shiv Sena, which rules India’s richest civic body, the BrihanMumbai Municipal Corporation (BMC), has strongly opposed the Maharashtra government’s move to abolish octroi and shift to a local body tax (LBT) regime by August 30.
Mayor Sunil Prabhu told Business Standard: “Since octroi contributes 45 per cent of total municipal revenue, any changeover has to be carefully studied, planned and executed without undue haste, to prevent any adverse impact on municipal finances. There is a need to appoint a study group to look into the issue and assess the impact of shifting to the LBT regime from octroi. Only after such an exercise should the government decide.”
The BMC had projected an octroi collection of Rs 6,100 crore in 2012-13 against Rs 5,800 crore in 2011-12. Its budget increased by 26 per cent to Rs 26,581 crore from Rs 21,096 crore during this period.
Prabhu said BMC uses revenue from octroi for capital expenditure on development projects in Greater Mumbai. “Therefore, the government should not show any haste in the abolition of octroi. The Mumbai civic body should not become a laboratory to assess the functioning of LBT and its outcome,” he said.
The state government has already launched LBT in various municipal corporations and municipalities in the state. The exceptions are Mumbai, Pune, Thane and Nagpur. Chief Minister Prithviraj Chavan has already indicated the government was keen to introduce LBT in these civic bodies by end-September.
Prabhu explained that octroi ensures uninterrupted and continuous cash flow. Besides, there is inbuilt potential for annual 15-20 per cent growth. “Day to day payment is made from cash flow generated from octroi collection without making overdrafts and, hence, no interest outgo,” he mentioned.
The civic body, said Prabhu, was in the process of finalising terms of reference for a study group onn LBT and its implications for the BMC.
