Govt mulling Local Body Tax's replacement?

NAGPUR: The state government seems to be planning to abolish Local Body Tax (LBT), but is finding it difficult to formulate a replacement for it. State cabinet minister Anil Deshmukh has sought suggestions on which tax system should replace LBT.
Deshmukh has asked for suggestions from NCP leader Vedprakash Arya, who had recently warned that he would go on a hunger strike if the government fails to abolish LBT.Arya had also submitted a letter to Deshmukh.
In reply to Arya's letter, Deshmukh said he was also opposed to LBT. "Earlier, you met me with a delegation demanding abolishment of LBT. I met NCP national president Sharad Pawar, who was firm on abolishing LBT. Pawar also spoke to chief minister Prithviraj Chavan in this regard. However, can you convey if you have any suggestion regarding a tax system to be introduced while abolishing LBT," he said.
Arya told TOI the government seems to have made up its mind to abolish LBT. "I will meet social activists and representatives of traders' associations and seek their views on a replacement for LBT. Traders are up in arms against LBT. Also, the new tax system has brought down the revenue of civic bodies, specially Nagpur Municipal Corporation. The new tax system should be introduced after seeking views from all those opposing LBT," he said.
There are discussions in NMC that the government may compensate for LBT by increasing the percentage of sales tax (VAT). NMC sources told TOI an increase in sales tax will leave the civic bodies dependent on the government. "Sales tax department will collect the tax and transfer it to the government. Then the government will transfer the proportionate amount to the civic bodies. In octroi or LBT, NMC was getting revenue on daily basis," sources said.