Last Monday, tomatoes were selling at about Rs10 per kg in some areas of the country. By Saturday, the price shot up to about Rs20. Likewise, prices of other fruits and vegetables soared by about 25 to 35 per cent over the week. And it is not inflation — it is the truckers strike — that is responsible for the price rise.

Finance minister P Chidambaram''s job is to raise revenues for the government to run. Revenues are raised in the form of taxes and duties. Here the minister has to be extremely judicious so as to ensure the tax amount, apart from raising appropriate revenue, is fair and equitable.

Over the last decade, the major contribution to the nation''s GDP has come from the services sector and it stands to reason that the major contribution to the government''s coffers should come from the services sector. Keeping this in view, Chidambaram had announced in his budget speech that service tax would be levied on the road transport sector.

To digress a bit, there are two types of taxes, — direct taxes and indirect taxes. In the case of direct taxes the impact as well as incidence of the tax will fall on the same person or entity. Let us take the example of income tax, which is a direct tax. Here, the initial burden will fall on the tax payer while the final burden will also fall on him as he cannot pass on the burden to some one else. In the case of sales tax, however, the initial impact or burden falls on the manufacturer but the manufacturer will finally pass on the burden to the consumer.

Services tax is an indirect tax so the burden of taxation will not fall on the trucker. So why the strike? The truckers'' version is that 99 per cent of the trucking industry comprises an unorganised, uneducated class of people. Then, how are they going to comply with formalities of payment of service tax?

"Instead of making transporters responsible for the collections, the government can utilise the sales tax / excise department as collecting agencies by adding the 10.2 per cent service tax on to the sales tax or excise duty. In this way, the compliance will be far better," said JM Saksena, secretary general, All-India Motor Transport Congress.

So, instead of paying 10.2 per cent service tax to transporters on the freight bill, these agencies will have to pay 10.2 per cent extra as sales tax or excise duty as the case may be.

"Moreover, unlike many other service providers, truckers do not have any fixed place of business. Today, I carry cargo to Kochi, from there I might go to Kolkata or Assam. So, each time a trucker makes a freight bill, he has to recover the service tax and deposit it at different places. This is where the small uneducated, unorganised truckers are facing problem," he said.

The contention of the truckers is that there is almost no demarcation between the freight agencies and the truck operators in many cases and thus many of truck owners will end up having to pay the tax. The railways, their major competitor, has been spared from this service tax, which they feel is unfair. Also, the truckers are already tackling the cost inflation with diesel prices having increased almost 17 times in the last two years. Truckers also argue that most truckers own two or at the most three trucks and in their case the tax will significantly drain their margins and threaten their survival.

Another problem they have to face is the recent court decision ordering the conversion of all vehicles over eight years to CNG or scrapping them. All these issues had already caused enough concern to the truckers before this tax was introduced and they were pushed to this strike.

According to the Maharashtra Truck Owners'' Association president, Daljit Singh, trucks travelling over 1,000 kms had already stopped plying since August 17 and the loading of vehicles had been suspended since August 19. Some trucks and tankers delivering milk, oil, vegetables and medicines joined the strike on August 24.

The government, in an attempt to calm the striking truckers explained that the service tax would be levied only on the freight agencies and not the truck operators and therefore, would not affect them. Talks are already on between the government and the truckers unions to ensure compliance without affecting either revenue or jeopardising the survival of small truck operators.

Assurd, the truck operators who went off the roads on Monday and stayed away till Friday was finally called off in the wee hours of Saturday.

The upshot of all this was that the road transport industry, which transports 60 per cent of goods was crippled. It brought about a rise in prices of basic commodities and decrease in production, affected exporters, created a dent on the earnings of daily wagers brought about the dreaded spectre of price rise and inflationary pressures.

Who benefited? The trade unions will collect their salaries as will the bureaucracy. You and I had to pay more for essential commodities while the nation lost a whopping Rs450 crore a day.