Infrastructure investment and social sector programmes have so far been the interests of the two UPA Governments to increase spending.
This is entirely understandable, given the glaring deficiencies in both areas; but from the perspective of fiscal rectitude, there is the affordability question to be considered.
If things go to plan, the reduction of the ratio proposed by the Finance Commission for 2014-15 will be achieved next year -- three years ahead of target. But the task of fiscal correction has barely begun.
Sources reveal that the revenue foregone last year on account of tax concessions and incentives was Rs 79,554 crore (Rs 795.54 billion) on corporate income tax -- mainly accelerated depreciation, software technology parks, etc. -- and on personal income tax a further Rs 36,186 crore (Rs 361.86 billion) -- mostly long-term savings.
Excise concessions cost Rs 170,765 crore (Rs 1,707.65 billion), while customs concessions had the biggest bill: Rs 2,02,240 crore (Rs 2,022.40 billion).
The total bill -- Rs 4.89 lakh crore (Rs 4.89 trillion) -- was nearly 80 per cent of the tax collection in 2009-10!
The peak income tax, for both companies and individuals, could then be no more than 22%. That would make India a tax haven and there would be much less incentive to take money out of the country; if the incentives work, tax revenue would actually climb as people report incomes more honestly.
Sources also reveal the second transition waiting to be achieved is on the subsidy front. The central subsidy bill, mostly on food, oil-related products and fertiliser, is slated to be Rs 1,43,570 crore (Rs 1,435.70 billion) next year.
The Economic Survey cites research, which suggests that between 40% and 55 % of foodgrain meant for the poor is pilfered.
Taking the budgets for all these, every one of about 50 million families that are below the poverty line could be given Rs 3,000 every month as a cash transfer -- better than what NREG offers, and enough to bring all of them above the poverty line, at no extra cost to the government.
India could be transformed into a tax haven, and a land without absolute poverty. Both dreams can become reality if managed and with the help of our Finance Minister considering the growth of the poor and the disabled.
Source: http://www.rediff.com/business
This is entirely understandable, given the glaring deficiencies in both areas; but from the perspective of fiscal rectitude, there is the affordability question to be considered.
If things go to plan, the reduction of the ratio proposed by the Finance Commission for 2014-15 will be achieved next year -- three years ahead of target. But the task of fiscal correction has barely begun.
Sources reveal that the revenue foregone last year on account of tax concessions and incentives was Rs 79,554 crore (Rs 795.54 billion) on corporate income tax -- mainly accelerated depreciation, software technology parks, etc. -- and on personal income tax a further Rs 36,186 crore (Rs 361.86 billion) -- mostly long-term savings.
Excise concessions cost Rs 170,765 crore (Rs 1,707.65 billion), while customs concessions had the biggest bill: Rs 2,02,240 crore (Rs 2,022.40 billion).
The total bill -- Rs 4.89 lakh crore (Rs 4.89 trillion) -- was nearly 80 per cent of the tax collection in 2009-10!
The peak income tax, for both companies and individuals, could then be no more than 22%. That would make India a tax haven and there would be much less incentive to take money out of the country; if the incentives work, tax revenue would actually climb as people report incomes more honestly.
Sources also reveal the second transition waiting to be achieved is on the subsidy front. The central subsidy bill, mostly on food, oil-related products and fertiliser, is slated to be Rs 1,43,570 crore (Rs 1,435.70 billion) next year.
The Economic Survey cites research, which suggests that between 40% and 55 % of foodgrain meant for the poor is pilfered.
Taking the budgets for all these, every one of about 50 million families that are below the poverty line could be given Rs 3,000 every month as a cash transfer -- better than what NREG offers, and enough to bring all of them above the poverty line, at no extra cost to the government.
India could be transformed into a tax haven, and a land without absolute poverty. Both dreams can become reality if managed and with the help of our Finance Minister considering the growth of the poor and the disabled.
Source: http://www.rediff.com/business
Tax rates are moving up the ladder...
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