The landmark national services tax which is to be introduced in July has still not got the approval of the Shiv Sena, a key member of Prime Minister Narendra Modi’s coalition government. The Goods and Services Tax or GST, which replaces a jumble of levies, often varying from one state to another, has been made law by parliament. It also has to be cleared by at least half of the states. Maharashtra, jointly governed by the Sena and the Prime Minister’s party, has not cleared the tax reform yet. A special session scheduled to discuss the reform and vote on it is expected to begin towards the end of next week. Which is why the state’s Finance Minister Sudhir Munghantiwar visited Sena chief Uddhav Thackeray at his home today.

The implementation of the GST is expected to add 0.5 percentage points to economic growth. But an extensive and complicated part of its blueprinting has been in figuring out how states will be compensated for the loss in revenue they will encounter when the taxes they exert are done away with. The Sena runs Mumbai’s lavishly-endowed corporation which has an annual budget of about 25,000 crores. Mr Thackeray had asked for written assurance that it will be similarly refunded for any losses it encounters on account of the GST - the Sena estimates that the corporation will surrender 7,000 crores annually.

The Finance Minister told Mr Thackeray that the state government will cover any losses.

"Mumbai has its own importance and we will not diminish this. Our agenda is to reimburse the losses the BMC will suffer due to cancellation of Octroi, Maharashtra’s Sudhir Munghantiwar told reporters.

Over recent months, the Sena has spared few opportunities to attack its partner, the BJP, on a wide assortment of issues ranging from the centre’s handling of Pakistan to Prime Minister Narendra Modi’s sudden demonetisation drive in November. The Sena has also disdained Chief Minister Devendra Fadnavis for failing to copy his counterpart in Uttar Pradesh, Yogi Adityanath, in a huge waiver of farmers’ loans.

 09 May 2017, 08:24 AM