UP won't go the VAT way, says Mulayam

At a time when almost all the states in the country have accepted the VAT regime, Uttar Pradesh Chief Minister Mulayam Singh Yadav has again reiterated his stance on not accepting VAT in the state, expressing his confidence in the trade-tax regime in the state.

According to the chief minister, Uttar Pradesh shall not accept VAT at any cost, even if it meant that the state became completely segregated economically from the rest of the country. He is, however, confident that the state shall have lower inflation rates than the rest of the country.

While other states are busy adjusting to the new tax regime, UP traders are divided in their opinion over the possible economic repercussions of the state not adopting VAT.

According to UP Udyog Vyapar Pratinidhi Mandal Chairman Banwarilal Kanchhal, the state is faring well without VAT and the revenue earned by the state in trade tax had increased by 28 per cent, compared with the states that had accepted the VAT regime. This, he says, clearly indicated that there is no need to impose the "illogical" VAT on the state's traders.

But on the other hand, local businessmen claim that the ball is no longer in the state government's court and Uttar Pradesh will be forced to accept VAT soon as not accepting VAT will impose excess taxation on the state's businessmen .

Apart from paying VAT on stuff imported from neighbouring states like Delhi, Rajasthan, Haryana and MP, UP traders will have to pay Central Sales Tax and UP Trade Tax on the material imported from these states.

As a result, they will end up paying higher prices for their purchases and this will ultimately reflect on the prices of the material for the end-user in the state.

According to Mr. T.N. Agarwal, one of the prominent leaders of the Agra traders there was a lot of difference in the situation now and that about one year back, when just a few states had accepted VAT but now, only two states "� UP and Tamil nadu remained as the non-VAT states which could cause the economic segregation of these states.

They said that sooner or later, UP would have to accept VAT as it could not remain cut off from the economy of the rest of the country.