CREDAI chief says LBT will lead to rise in corruption

Opposing the Maharashtra government's decision to impose local body tax (LBT) in lieu of octroi, developers' apex body CREDAI chairman Lalit Kumar Jain said the new levy will result in rise in corruption and be detrimental to business as well as consumers. ''There is a potential threat of it becoming breeding ground of corruption.''

Jain, who is also the chairman and managing director of Kumar Urban Development, said the government should instead raise VAT to compensate for octroi.

''Creation of additional machinery for LBT collection will only increase burden on the government and it could be avoided through just raising VAT.'' He expressed the apprehension that the new machinery and the new system of search operations that come with LBT will lead opening up another window for corruption. He also vehemently opposed the flat one per cent LBT on real estate and over and above LBT on all building material. This will only lead to increased burden on end buyers who are forced to cough up heavy amounts for a series of taxes.

''Heavy tax regime will also discourage new businesses and may even lead to a fresh capital flight out of Maharashtra,'' Jain said and appealed to chief minister Prithviraj Chavan to reconsider LBT and opt for much more practical approach.

''Maharashtra was known for trend setting approach in tax rationalisation (Maharashtra was fist to rationalise stamp duty bringing it down to 1% onwards from 10%) and pro development policies but off late we have lost that approach.''