The Hindu : Business : FM non-committal on moderation in tax rates

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Wednesday, Jan 02, 2008
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FM non-committal on moderation in tax rates

Special Correspondent

Directorate of Human Resources to be set up

P. Chidambaram

NEW DELHI: Even as revenue collections through direct taxes this fiscal are set to exceed Rs. 3,00,000 crore and record a 12 per cent increase over Budget estimates, Finance Minister P. Chidambaram on Tuesday chose to remain non-committal on the issue of moderating taxes in the Budget for 2008-09.

At a hurriedly convened press conference on New Year’s Day here, Mr. Chidambaram said: “Let me recall what I said. If voluntary compliance [in taxes] increases, there is a case for moderation. That does not mean the case has been accepted. You make a case for moderation instead of writing imaginary stories”.

The Finance Minister was replying to a query on his earlier statement regarding a case for tax moderation if voluntary compliance raised collections. However, even while announcing that direct tax collections would exceed the mop-up through indirect taxes for the first time, Mr. Chidambaram refused to indicate any easing in tax rates.

During the April-December period of the current fiscal, direct tax collections, after refunds, crossed Rs. 2,05,000 crore to post a growth of 42.4 per cent. The mop-up by way of corporate taxes increased by 39.8 per cent to Rs. 1,27,683 crore, while personal income tax (including security transaction tax, fringe benefit tax and banking cash transaction tax) soared by 50 per cent to Rs. 77,380 crore.

With the objective of restructuring the Department of Direct Taxes for enhancing voluntary tax compliance, Mr. Chidambaram announced the setting up of a Directorate of Human Resources for the department.

On the chances of achieving the fiscal deficit target, Mr. Chidambaram said: “Our fiscal and revenue deficit is much lower than projected, much better than last year. Actually we have got [a] primary surplus.” The fiscal deficit during April-November stood at Rs. 96,274 crore, working out to 63.8 per cent of the annual target of Rs. 1,50,948 crore, or 3.3 per cent of the GDP (gross domestic product).

On the future roadmap, the Finance Minister referred to the proposed implementation of the Goods and Services Tax (GST) by April 1, 2010, which, he said, could give a fresh momentum to collection of taxes.

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