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No compensation, No VAT: CM

By Our Special Correspondent

CHENNAI APRIL 30. Tamil Nadu will not implement the value-added tax regime unless the Centre fully and permanently compensates revenue loss, the Chief Minister, Jayalalithaa, told the Assembly today.

Acknowledging that there were problems in enforcement, she said the State would stand to lose Rs. 2,500 crores annually with the implementation of VAT.

"The Centre has only agreed to compensate States for the loss fully in the first year (of introduction), which will gradually be reduced in the next two years and eventually stopped. This is not acceptable to us". Her Government had informed the Centre of its stand. The Finance Minister, C. Ponnaiyan, said it was the Centre which would benefit by the VAT, getting 35 per cent of the proceeds of income-tax collections. "If the Centre does not want to implement VAT, we won't insist on it".

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