Supporting the agitation by Maharashtra traders against the newly introduced Local Body Tax which replaces octroi, Indian Merchants' Chamber today asked the state government to re-consider integrated measure of tax collection.
The agitation has been going on for the last three weeks.
"It has always been our view that octroi should be abolished and we appreciate the government's initiative. However, with the new LBT, we feel that creating multiple centers of tax registration and collection is not advisable since it will encourage corruption," IMC President Niranjan Hiranandani said here.
LBT will also lead to extra burden on the consumers, he said.
"LBT will make things complicated. Besides, since the tax will be collected from the traders, they will definitely transfer the extra financial burden onto the customers," Hiranandani said, adding, "It will result in rise in inflation.
"While the government is trying to eliminate number of windows and to have one window system, the state government is introducing one more window in the form of LBT, which would breed corruption," he said.
IMC has suggested that instead of introducing a new taxation system, the tax in lieu of octroi should be integrated with VAT by adding 0.5-1 per cent surcharge.
"This should further have a clear provision that additional 1 per cent surcharge would be diverted to BMC (Mumbai municipal corporation) or other local bodies.
"This will allay the fear of BMC that it will not get funds from the state through VAT collection and will go bankrupt after the abolition of octroi," he said.
