Trade in Goa gears up for new ST regime

Trade in Goa gears up for new ST regime
SHIV KUMAR

PANAJI, JANUARY 12: Traders in Goa who have profited hugely from a low sales tax regime to sell consumer goods to buyers in neighbouring Maharashtra and Karnataka are gearing up for the implementation of uniform sales tax across the country from January 15.

The measure will rob Goa of its reputation as a destination for shoppers looking for bargains as sales tax rates here will now be almost on par with other states.

Price tags on motor cars, computers, televisions, refrigerators, washing machines and other luxury items are expected to go up sharply by as much as eight per cent in some cases.

``Some items like computers which enjoyed zero sales tax will now attract eight per cent sales tax,'' Rakesh Mehta, secretary, finance, told The Indian Express.

The business community is therefore not amused. ``A Mitsubishi Lancer will now be costlier by Rs 50,000,'' says Pankaj Joshi, a prominent car dealer in Goa. Joshi noted that buyers from outside the state who purchased vehicles from him will look for options closer home.

Despite the growing prosperity of the local population, tourists and bargain hunters continue to be big customers in this sunshine state.

``Visitors from small towns in Maharashtra and Karnataka prefer to buy electronic items like calculators and small microwave ovens which are easy to carry,'' says Damodar Keni, a showroom owner. He fears that tourists may not find such items worth the trouble of carting home several hundred kilometres away.

The measure comes at a time when dealers in big ticket items like motor cars were just picking up business as the economy came out of a recession. ``1999 was a good year after a long time, now this is a setback,'' says Joshi. He feels that it would take the business community in the state some six months to stabilise their business.

The Goa Chamber of Commerce and Industry is yet to formulate its response to the new policy. ``We are still studying the matter,'' says P Bothello who is heading the sales-tax committee of the Chamber.

The state government however is pleased at the uniform sales tax rates as it will help generate higher revenue. ``We expect to garner an additional Rs 16 crore as sales tax on petrol goes up to four per cent,'' says Rakesh Mehta. Petrol accounts for nearly 60 per cent of the Rs 290 crore worth of sales tax collected in the last financial year.

The implementation of uniform sales tax across the country is part of a plan to abolish incentives by state governments like sales tax concessions and tax-breaks to attract investment. Though state governments may levy higher sales tax, they will not be allowed to reduce the tax below the floorslabs agreed upon by the finance ministers' conference. A uniform value-added tax for all states is also on the anvil. It is expected that state governments will now concentrate on providing better infrastructure in order to attract investments.