Posted On Saturday, April 07, 2012 at 04:12:12 AM
There are more than 150 trade associations which are members of the All India Gems and Jewellery Trade Federation. And there are also local associations of jewellers from Karol Bagh in Delhi, from Surat, from Bhopal and all over India. There’s Zaveri Bazar of Mumbai too. There are probably some in Jharkhand as well.
For three weeks these various associations and their members showed tremendous nationwide solidarity. They all went on a strike against a proposed tax in the Union Budget. Shops were closed and observance was almost 100 per cent. Business was shut completely.
|For three weeks various jewellers’ associations showed tremendous nationwide solidarity against proposed tax in the Union Budget
The estimated loss to trade was about Rs 20,000 crore. Thankfully it is not Diwali season, and Akshaya Tritiya is still two weeks away. It is a very auspicious day for Hindus and Jains, and much jewellery purchase happens around Akshaya Tritiya. Otherwise the losses due to the strike would have been much higher.
Workers and owners acted in unison. This strike gained countrywide publicity and support. Anna Hazare is said to have pitched in his support. The opposition parties also opposed the tax.
The strike was called off only after a delegation met the Finance Minister and the leader of the United Progressive Alliance. Presumably the strikers have got some assurance of a rollback. That can happen only in Parliament, not outside.
The bone of contention was around three proposals: hike in gold import duty from 2 to 4%, compulsory PAN card for jewellery purchase of more than Rs 2 lakh, and an excise duty of 0.3% on unbranded jewellery. Let’s take each of them.
Gold imports have touched 60 billion dollars, depleting precious foreign exchange of the country. The additional duty will fetch about Rs 5,000 crore more to the cash-starved government. Besides reducing our gold addiction is a good thing, no? Secondly asking for a PAN card can’t be bad. You need it for a bank account, so why not for a large jewellery purchase?
Thirdly a tax of 0.3% would be just 30 rupees for a Rs 10,000 jewellery. That’s tiny. So why the furore, and nationwide strike? Apparently the real reason is that unbranded jewellery is mostly out of the tax net of excise inspectors. This tiny tax would bring them all in the net.
And the industry fears the worst kind of “inspector raj” and harassment. Is this well-founded? Can it not be separately addressed, rather than rollback the entire proposal? The next few weeks will reveal who wins this tussle. Some years back the power loom sector in textiles also successfully campaigned to get rid of excise tax completely.
Compare the jewellery story with another tax proposal. The state of Maharashtra introduced a sales tax (called VAT) on beedis for the first time. This tax went from 0 to 12.5. As a protest against the tax, beedi manufacturers went on strike.
Beedi making is highly labour intensive, highly feminised and works like a cottage industry. Beedi rolling is done in homes (often by children also), and payment is on piece rate, not fixed salaries. That is like daily wages. A family may get around 100 rupees per day for rolling about 2,000 beedis.
Around Solapur, more than 65,000 women did not get paid a single paisa because their employers were on strike. (Note that some of the richest MPs as also many high bracket income tax payers in India are beedi barons). So the beedi manufacturers’ strike hurt workers disproportionately.
The state will make less than 100 crores from this beedi tax, out of a total budget of 1.4 lakh crores. Is it worth playing with livelihoods of women (who can’t switch to another job so easily). Granted this is really a tax on tobacco, but unlike cigarettes, this affects employment. It’s odd that the gold rollers are winning, and beedi rollers suffer quietly.
This is with reference to ‘Silent revolution in sales tax’ (PM, March 31). The Maharashtra government presented a surplus budget only because it has a sound sales tax collection machinery in place.
The government has now pegged the sales tax collection this year to be Rs 55,000 crore. This is a no mean chievement for any state. In fact the Central government is impressed and wants Maharashtra to lead a pilot project on integration of all taxation.
The state should now focus on its new task and come up with revolutionary ideas to boost revenue generation for the entire nation just like it did for itself.
- Anish Ahire