Why VAT collections were higher during AAP government days in Delhi ?

From: mediacellaap <mediacellaap@gmail.com> Mon, 1 Dec '14 7:34p

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                          December 1, 2014 (Monday)

The encouraging response of the traders community to the fund raiser organised by the Aam Aadmi Party’s traders wing on Sunday has led to a lot of curiosity about the event and the reasons for support.

Following the event which resulted in more than Rs 50 lakh transparent donation towards the party’s campaign for the coming Delhi assembly elections, a large number of traders have contacted the party pledging their support and donations.

The reason behind this support from the traders community are the concrete pro-trader steps taken by the AAP government in January and February.

Arvind Kejriwal has consistently maintained that majority of traders want to do their business with honesty and raids on them by different departments are aimed at harassing them and infact extracting money from them.

This belief was strengthened when the AAP government was formed in Delhi, since raids were completely stopped. The party is backing its assertion with evidence based on facts that coercion does not work and if a government provides an atmosphere conducive for doing business, tax collections go up.

Consider these facts for the last quarter of the financial year 2013-14 when the AAP government was in office. The Value Added Tax (VAT) revenue generated for this period was Rs 5666 crore, whereas the collection for the same period in the previous year (2012-13) was only Rs 4669 crore.

It is clear that the decision of the AAP government to disallow even a single raid on traders resulted in a 21% increase in VAT revenue collections for the Delhi government.

However,  immediately after the fall of the AAP government, there was a sudden spurt in the raids conducted by the Delhi administration. Atleast 200 raids are being conducted every month and these are proving to be counter-productive. The VAT revenue collections for the first quarter of the current financial year are merely at Rs 3808 crore, meaning that the tax collections fell by one-third (33% percent reduction).

 Based on this evidence, the AAP reiterates that coercive tax collection from traders has failed in Delhi.

The AAP promises to keep the VAT rates in Delhi lowest in the country so that the national capital can be converted into a trading hub.

Reduction in VAT rates will lead to increase in trade volume, margins and profitability. This will be a win-win situation for both the consumers and traders.

Abolition of inspector raj will be the priority of the AAP and an important element of the AAP vision for traders of Delhi.  

(Please find enclosed the Hindi press release)

Regards.

AAP Media Cell.