More give-aways mean wider fiscal deficit: Narayan

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New Delhi, March 2: : Revenue secretary S Narayan has said that any more tax sops would have meant increasing the fiscal deficit beyond the target of 5.3 per cent pegged for 2002-03.

“There are no more give-aways (tax sops) as it means printing more money (increasing fiscal deficit). Our borrowings have already gone up,” Dr Narayan said at a post-Budget meeting of Confederation of Indian Industry (CII) here on Saturday.

Dr Narayan said that the impact of the 5 per cent surcharge on corporate tax would be minimal as it effectively raises the tax rate by a meagre 1.05 per cent.

The withholding tax has been completely removed in this year’s Budget.

The government’s firm stance against the industry’s demand for cut in corporate tax rate to 30 per cent from 35 per cent, lifting of minimum alternate tax and hiking investment allowance comes in the wake of lower revenue collections and burgeoning fiscal deficit at 5.7 per cent this fiscal.

Borrowings, which were over Rs 91,000 crore so far this fiscal, had to be pegged higher at over Rs 95,000 crore for the next fiscal.

He said that the higher depreciation allowances already being offered reduced the tax burden on corporates.

The government had last year announced cuts in both the tax and tariff rates in order to provide fillip to investments and stimulate demand in the economy. However, the growth in industry has not picked up which has resulted in a massive revenue shortfall.

The government also drew broadly the roadmap for bringing import duties down to 10 per cent for raw materials and 20 per cent for final products by 2004-05.

On excise duty, the revenue secretary said the government would have liked to bring down the rates to 16 per cent for many items, but that would have resulted in too much revenue loss.

“What you see in this Budget is continuity of government’s earlier policies,” he said.

The dividend tax was “skewed” against the low-income group tax payers, he said, adding “dividend income is income and should be taxed”.

The revenue secretary said providing relief to the shipping industry by removing minimum alternate tax, and lowering duties for the textiles, hotel and entertainment industries were the positive aspects of the Budget.

The Budget would also attempt to boost growth through increasing plan expenditure by 18,000 crore, he stated.