In its pre-Budget memorandum to the state government presented to the state finance minister Kanwaljeet Singh in Chandigarh last week, the chamber has suggested the government to optimize revenue receipts through maximum compliance.

The government should introduce expenditure reforms and withdraw from the loss-making public sector undertakings. Such units could be converted into joint sector units, it has suggested.

The sales tax structure should aim at revenue elasticity and discourage tax evasion. Hence, the multiple tax slabs, at present numbering 8, should be reduced to 4, varying between 2, 4, 6 and 8 per cent for essential, general and luxury goods, the memorandum has demanded.

Lower rates would encourage compliance and fair competition which is essential for growth of trade and industry. This shall be in tune with the union governmentpolicy to reduce tax rates for achieving buoyancy in revenue, the chamber has said.

Further, consumer goods in general are taxed at first stage while basic inputs are taxed at the last stage. As against the 60 items subjected to first stage sales tax, the government should identify more items for collecting tax at the first stage to ensure higher revenue. Set-off should be provided on inputs used in the final consumer or industrial products, according to Phdcci.

The chamber has also demanded that efforts should be made to identify at least 30 items for being subjected to tax at more or less uniform rate in the northern region to check the ST distortions.

While 15 items were identified for the purpose by the finance ministers of northern states, the other commodities to be considered are colour and black and white televisions, audio and video projection systems, air-conditioners, washing machines, microwave ovens, cooking ranges including hot case, oven, fans, coolers, electric bulbs, electric fittingsand cables, transmission equipment, transformers, switchgears and other electrical equipment mainly used for industrial and power generation and transmission purposes.

The list also includes computers, software and peripherals, plastic products, including consumer goods, building hardware, sanitaryware, toiletries, watches and clocks, shoes and other footwear, readymade garments, including knitwear, hosiery goods and leather garments and motor spare parts.

To reform the power sector, the government should set up a three-member regulatory commission to distance the functioning of the electricity board from the state government, fix cost based tariff for various segments of consumers and to ensure generation of funds for expansion and upgradation of transmission and distribution network.

The thrust of the fiscal policy in 1998-99 should be to aim at evolving a system to ensure optimum revenue receipts through better compliance.Simultaneously, efficient resource allocation and a mission approach to humancapital formation by adopting foolproof measures to achieve 10 per cent incremental enrolment of children in schools should be a modest goal, the chamber has suggested.

The government should introduce expenditure reforms and withdraw from non-core sectors. Economy in expenditure and efficient use of funds would lead to a higher allocation for developmental expenditure. A target of 40 per cent expenditure should be budgeted for development, the chamber has demanded.

The loss-making PSUs should be restructured and converted into joint sector companies to be run by a professional board of directors. The dividend thus available would enable the government to finance developmental expenditure. If the units can't be turned around, they should be closed down and the employees offered voluntary retirement scheme like the Andhra Pradesh government has done.