INTERVIEW OF THE MONTH
 Finance Minister, Tripura.
Shri Badal Choudhury

Standing with rock-like solidity Tripura's finance minister Badal Chowdhury appears to have taken in his weighty stride the heat and dust generated by the implementation of VAT in Tripura . A man with the unmatched achievement in northeast of having steered the state's finances prudently without any major crisis over the past decade  Mr Chowdhury stands in stark but refreshing contrast with his beleagured counterparts in seven other states of the region, splitting hairs over increasing fiscal deficits and making both ends meet . A man with  highly pragmatic and progressive ideas , Mr Chowdhury agreed to enforce the newly-mooted VAT system in the state in public interest after debates in hallowed confines of meeting halls in Delhi ,presided over by eminent economists and experts. In this exclusive interview he gave glimpse of his mind and ideas on the contentious VAT and how it can benefit both the ruler and the ruled.

Qus : There is hue and cry over VAT, What is it actually?

Ans :VAT is a new concept in our country. People may have some doubt and confusions about it. It is nothing but a kind of sales tax only. We believe that the people will accept it if they are made aware of the new system.

Qus : How is VAT different from Sales Tax ?

Ans :  Sales Tax is a tax charged on sale price at the first point of sale only. VAT is a kind of retail sales tax charged on sale of the first point of sale as well as at the subsequent points on added value. In sales tax system, there was no provision for refund.
In Value Added Tax system, Dealers will get Input Tax Credit (refund of tax already paid)  for the amount already paid by them as Value Added Tax when they purchased the commodities. Manufactures will also get similar benefit for purchased of raw materials.

Qus :  What are the benefits that will accrue to the government as well as to the people from VAT.

Ans : An Expert Committee in such away has fixed the rates of VAT that the revenue collections in the states remain unchanged. But still, there is an apprehension that during the first two/three years, revenue collections of the State Government may fall, may be, partly because of lack of infrastructure and partly because of changed of rates Government of India has therefore assured to compensate the states for the probable losses.

Introduction of VAT in the states will have no financial implication in case of the businessmen. The consumers will pay VAT ultimately. The Dealers will only act as the collectors at different points. Almost all the small traders and petty Businessmen are outside VAT. They are not required to pay any Value Added Tax.

Consumers will be benefited, because in case of most of the commonly used commodities, prices are likely to fall. Manufactures will be given Input Tax Credit on raw materials and consequently production cost will come down. CST is now being charged @ 4%. This will also be abolished in phases. Purchase price at the source will therefore fall by 4% ultimately. In addition, 47 items are exempted from VAT. In case of many essential commodities, medicine etc, for which local sales tax rates were higher than 4% VAT rates have been reduced to 4%.

Qus : It is clear that some state are reluctant to implement VAT, Why so ?

Ans : It was decided in the year 1999 in a conference of the Chief Ministers that VAT would be introduced in all the States of India. In pursuance of the decision taken by the Chief Ministers is that conference an Empowered Committee was formed with all the State Finance Ministers as its members to work out the modalities of introductions of VAT.

After a series of discussions, the Empowered Committee decided, with the approval of the Central Government to introduce VAT in all the states with effect from Ist April, 2005.

In the last meeting of the Empowered Committee held on 7-3-2005 also, it was discussed and all the Finance Minister including the Finance Minister of the BJP led State Government opined in favour of introduction of VAT from Ist April, 2005. All the National Political Parties and most of the Regional Parties were in favour of introduction of VAT. VAT has already been introduced in 127 countries including China.

In it difficult to understand why the BJP led State Governments are now showing their reluctance to introduce the new system.

Qus :  What prompted the businessmen of Tripura to rise in protest against the enforcement of VAT.?
Ans : The Tripura Value Added Tax Ordinance was promulgated on 17^th February, 2005.

VAT Bill was reference by TLA to the Select Committee. This Committee consists of MLAs from all political parties of the House. Committee held several meetings. Representations of different organization were considered and hearing given.

Committee examined the Bill clause by clause and came to an unanimous decision that the Bill may be passed with few changes and suggested by the Committee.

The Department did not get sufficient time after enactment of the law to conduct large scale campaign on the issues.

One seminar was organized a few month back which was participated by Dr. Asim Kr. Dasgupta, Chairman, Empowered Committee and Finance Minister of West Bengal. Thereafter one seminars was held at Udaipur. Another seminar was organized at Agartala in which Dr. Partha Sarathi Some, Economic Adviser to the Union Finance Ministers was present.

It is true that this seminars are not sufficient for making the businessmen and the consumers fully aware of the new system.

Qus : There seems to be a lot of confusion about VAT among people as well as among businessmen. Will the government launch a campaign to popularize it ?

Ans : Some more seminars and workshops will definitely be organized by the Department to make the dealers and consumers aware of the new system. For removal of confusions the dealers and consumers may also interact with the government at any time.

Pint and Electronic Media have an important role to play in creating awareness among the people and also in helping removal of doubts about the VAT structure. I hope that they will play a positive role.