Industries threaten to wind up

| 13 October 2000 23:15 IST

Will the imposition of entry tax spell doom for Goa - the industrially backward tourist state ?

Fear is being expressed that existing industries may wind up their business from the tourist state, while the local industrial circle and the state administration is vertically divided over the issue.

The demand, obviously, it to scrap the newly introduced tax, on the lines of octroi but not collected at any entry point of the state borders.

"The entry tax is basically illegal, unconstitutional and ultra virus", states a joint resolution passed recently by the Goa Chamber of Commerce and Industry, the CII as well as the Goa Pharmaceuticals Manufacturers Association.

Soon after the uniform sales tax policy compelled the state administration to hike sales tax on several commodities, the entry tax was introduced from September. It primarily means any imported goods, which is not meant for sale, would attract this tax.

It varies between half per cent to six per cent on various goods including plant and machinery, except 10 per cent on petroleum products. The small industry however has been excluded from the list, except for the capital goods, but not pharmaceuticals, ferro alloys and steel melting units.

Having no raw materials available and hardly any market for the finished goods, Goa is being promoted as a processing zone by offering fiscal incentives like sales tax exemption and income tax holiday by the state and central government.

"It is no more viable to carry on industrial activity here. While some have already dropped their expansion plans, some industries are seriously considering feasibility of shifting the industry from Goa", says Dattaraj Salgaoncar, the GCCI president.

"Such kind of taxation should not be the reason to wind up business as we have simply filled a major loophole in revenue generation", says Y S Pai Bir, assistant sales tax commissioner. The state expects around Rs 25 crore through entry tax.

Contrary to the claims made by industrialists, Bir feels it would encourage the industries either to purchase all these goods in Goa by getting dealers appointed or making stock transfers since the department collects only three per cent sales tax on raw materials or capital goods purchased in the state.

"The small industry, functioning as ancillaries of the medium or large scale units, would also get hampered ultimately though our sector is excluded from it", says Sudin Naik, president of the Goa Small Industries Association. He has also asked for excluding export oriented units in order to compete globally.

The industry here is also critical about imposition of 10 per cent entry tax on petroleum products as several industries here use DG sets as a solution for erratic power supply and low voltage.

"We have been cheated by inviting us here with a promise of regular water and power supply", says a senior official from a leading pharmaceutical unit. Goa has over 200 pharmaceutical units, mostly in the small scale sector, who are badly hit with the entry tax.

Though pressure is mounting on chief minister Francisco Sardinha to reconsider the decision, the possibility appears bleak as it would totally upset the resource mobilisation plans for the tourist state, which is totally gone bankrupt nowadays.

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