Assocham moots 10 per cent tax on farm income
PTI
NEW DELHI, January 4: The direct tax base has to be widened further by bringing agricultural income within its ambit with a nominal tax of 10 per cent, Associated Chambers of Commerce and Industry (Assocham) has said.The scope for greater administrative efficiency in tax assessment and collection needs to be examined and tapped to improve compliance, the chamber study on "fiscal prudence and consolidations" says. Assocham also said there was a need to phase out subsidies to release greater resources for public investment programmes. Expenditure reform has lagged behind tax reform with unproductive expenditure continuing to rise unabated and the fiscal reforms undertaken by the government have hardly any impact on expenditure, Assocham says. Fiscal indiscipline is attributed to the present system of inter-governmental fiscal transfers and the weak revenues, the chamber says. The performance of the state governments coupled with the burgeoning wage bill and uneconomic state enterprises has increased
the indebtedness of states to the Centre over the years, it adds. There is no major progress in bringing down interest payments on public debt and subsidies which together absorb 60 per cent of the Centre's revenue, Assocham says. Persistence of a large revenue deficit, both at the Centre and the states, reflects adversely on the quality of fiscal adjustment, the chamber says. It has called for accelerated public investment to promote growth. Fiscal management is necessary at all levels of government, including the state and local governments. While revenue gap of states has been deteriorating since the mid-80's, fiscal deficit as a percentage of GDP is significant at around three per cent. The chamber also pointed out that the fiscal stabilisation programme will have to be attuned to the objectives of higher growth and enhanced productivity. There is also a need for qualitative fiscal correction which will augment the asset base of the public sector, generate adequate returns on capital employed and
provide complementarily to private investment. The government should undertake on a priority basis disinvestment and restructuring of the public sector.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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