Business Property Tax as an Alternative

to Octroi Shyam Nath Tapas Kumar Sen One of the recent developments in the area of revenue of local governments is (hat 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 The 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.