Publication

Abstract : One of the recent developments in the area of revenue of local governments is that octroi is on its way out. A vigorous drive is on to locate a new tax to compensate the urban local bodies for the loss of octroi revenue. Tax supplements to sales tax in the form of entry tax and surcharge/additional sales tax have been employed as a substitute measure to restore local fiscal balance in the absence of octroi. These present study evaluates these tax supplements in-terms of their impact on resource allocation, equity and local fiscal autonomy. Surcharge/additional sales tax has been argued to be better than entry tax. However these taxes being state levies are found to be contradictory to the objective of local fiscal autonomy.