Value added tax dropped for common man: Sheila Dikshit

NEW DELHI: The proposal to impose 5% value added tax on CNG has been dropped by chief minister Sheila Dikshit. She also withdrew the proposal to levy 5% VAT on textiles costing above Rs 300 per metre, garment sets priced above Rs 600 and sarees costing above Rs 1,000 to "protect" the textile industry in the city.
To project budget 2012-13, which was passed in the Delhi assembly on Monday as "people friendly", and in an attempt to woo the urban voter reeling under the impact of inflation, Dikshit announced that the government's proposal to introduce VAT on CNG has been dropped keeping the interests of the common man in mind.In her budget speech, Dikshit had stated that VAT on CNG would have brought the state exchequer around Rs 110 crores of revenue.
During the Delhi bandh by the BJP on Thursday, the opposition had demanded withdrawal of the proposal of VAT on CNG and a rollback on petrol prices. While the CM had vehemently labeled the bandh a failure and asserted that she had no plans to withdraw the proposal of imposing of 5% VAT on CNG, Dikshit had to give in to her own party men who were critical of her proposal. MLAs had expressed fears that hike in price of the fuel would have a negative effect on the party ahead of next year's polls.
Explaining the move to revoke the decision to withdraw VAT on CNG, Dikshit cited the "anger" of the MLAs and the demand of the common man.
"You (Congress MLAs) have expressed your anger. We have been elected by the people of Delhi. If they demand something, we will have to listen to them. People are reeling under price rise and we have to understand their sentiments," she said.
In her speech before the budget was put to vote Dikshit took on the BJP led Opposition which went missing from the house as they were suspended from the proceedings of the Assembly for three days after they protested against the proposed VAT on CNG.

The fact that the Delhi government has withdrawn the proposed 5% value-added tax on compressed natural gas is welcome, but the entire episode raises serious questions about how much thought goes into our tax policy. When the chief minister announced the decision to impose VAT on CNG in her budget speech last week, surely she was aware that this is the fuel that drives the city's public transport. It cannot have come as a surprise to her that users of the fuel like autorickshaw and taxi owners demanded an increase in fares. Nor should the political opposition to it have been unanticipated. So why propose and then withdraw? It is precisely this kind of back and forth that creates the uncertainty that can be so damaging in economic matters.