The Hindu : National : "We will reconsider if withdrawal tax objectives fail''

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Friday, May 06, 2005

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National

"We will reconsider if withdrawal tax objectives fail''

Special Correspondent

Parliament approves budget; Chidambaram confident of zeroing in on the black money trail

NEW DELHI: The Union budget for 2005-06 received Parliament's approval on Thursday with the Rajya Sabha returning the Finance Bill, 2005 as cleared by the Lok Sabha, by voice vote.

The Bill was passed by the Lok Sabha on Monday after Finance Minister P. Chidambaram had introduced a number of amendments to exempt savings bank account holders from the Bank Cash Transaction Tax (BCCT) and raise the ceiling for tax to Rs. 25,000 for individual current account holders and to Rs. 1 lakh for business enterprises along with a higher income-tax exemption limit for women and senior citizens.

In the Lower House, the discussion drew NDA participation. Now with the National Democratic Alliance continuing the boycott of Parliament, Opposition benches in the Upper House were deserted although the Telugu Desam Party took part in Thursday's proceedings.

Replying to the discussion, Mr. Chidamabaram said he was confident of achieving success in meeting the objectives of the bank cash withdrawal tax, zeroing in on the black money trail. He assured the House that the measure would be reconsidered if it failed to check the generation of black money.

`A different tax'

Countering the criticism that the cash withdrawal tax amounted to double taxation, he said people were paying excise and customs duty as well.

"It is a different tax. It is a better way to levy tax on withdrawing money rather than deposits. There is this huge black hole and there is no trace where this money is going in — properties, arms, smuggling. If objectives of this tax fail, we will reconsider it.''

Mr. Chidambaram, responding to the Left criticism, said all statutory contributions were kept out of the ambit of the Fringe Benefit Tax (FBT). There would be no harassment and the Government would simplify it further if there was any problem in implementation. Corporates were disguising salaries as fringe benefits which should be taxed.

Describing the Bill as a "reasonable package with concessions, exemptions and adjustments," Mr. Chidambaram assured members that wherever valid criticism and difficulties demanded corrections would be made.

Taking the cue from a bank advertisement's punchline and Bollywood hit `Main Hoon Naa', the Minister said: "Hum Hain Naa" (We are all here to address problems).

Describing the Value Added Tax (VAT) as the single biggest tax reform in the country, Mr. Chidambaram appealed to the BJP-ruled States, Tamil Nadu and Uttar Pradesh to take to it. He sought to dispel fears that VAT would result in losses for the States, citing the examples of Kerala and Haryana, which have reported higher collections under the VAT administration.

"The Centre is only a facilitator, it is for the States to implement VAT. It is a revenue enhancing tax.''

`Unfair levies'

Earlier, Jairam Ramesh (Congress) questioned the rationale behind the cash withdrawal tax and the FBT, saying there was no need for the two levies and the measures appeared unfair. The popular sentiment was negative and if there was any justification for the levies, it failed to percolate down. The budget exercise should not be veiled in secrecy, he said and wanted a wide public debate four or five months in advance on tax proposals.

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