Assembly passes Bill to compensate civic bodies for GST losses

BJP-led govt. goes out of its way to get coalition partner Shiv Sena’s support in the House

Just visiting: Yuva Sena chief Aditya arrives at the Legislative Assembly in Mumbai on Saturday. He took in the GST debate from the visitor’s gallery.

Mumbai: The Legislative Assembly on Saturday unanimously passed a Bill to provide compensation to 27 municipal corporations for loss of revenue due to the implementation of the Goods and Services Tax (GST) in the State. Compensation for the BMC will be against loss of revenue due to the abolition of Octroi as per the Local Fund Accounts Audit.

The Bill is among three crucial pieces of legislation presented in the special Assembly session that began on Saturday, after ruling coalition partner Shiv Sena raised objections to the compensation for municipal corporations, especially the BMC. Finance Minister Sudhir Mungantiwar had visited Sena chief Uddhav Thackeray at the latter’s residence for a special presentation on the Bill after Mr. Thackeray had indicated his party may not support it in the House.

Yuva Sena chief Aaditya Thackeray presence in the viewer’s gallery was noted in the light of Mr. Thackeray asking the State government to not compromise on the autonomy of civic bodies under the pretext of GST.

The Bill takes financial year 2016-17 as the base year to calculate compensation payable to BMC and other municipal corporations, which shall be at the compounded rate of 8% per annum. Addressing the Sena’s concerns, Mr. Mungantiwar had promised to fix a date for releasing funds to the BMC. The Bill states that funds will be released on the fifth of every month to designated bank accounts.

Discussing the Bill in the Assembly, former Chief Minister and Congress leader Prithviraj Chavan said the government is likely to cause losses over ₹40,000 crore over the next five years by abolishing Local Body Tax (LBT) in August 2015. “The Centre won’t reimburse the amount and we will have to pay it ourselves. In five years, the State would have suffered losses of nearly ₹40,000 crore,” Mr. Chavan said.

Former Finance Minister and NCP leader Jayant Patil asked the government to release funds based on the performance ratings of municipal corporations to enhance their performance. Vasai MLA Hitendra Thakur questioned the rationale behind the blanket 8% compounded annual growth for calculating compensation to municipal corporations.

Mr. Mungantiwar said political bias will not prevent release of funds as the process is bound by an Act. “Not only municipal corporations, the government is considering releasing funds to departments based on performance ratings.”