Growth of net tax revenues of the Centre could come down sharply in next fiscal putting a question mark on the achievement of fiscal and revenue deficit targets for 2008-09.
The slow down to 11.24% would be far lower than the 16.74 % rise in 2007-08, according to a paper being prepared for consideration at the forthcoming meeting of the full Planning Commission, under the chairmanship of Prime Minister Manmohan Singh.
The finance ministry has projected its net revenue collection ( tax and non-tax) to rise to Rs 5,41,096 crore in 2008-09, from the budget estimate of Rs 4,86, 442 crore, as per its estimates for the 11th Plan period. This lower projection could put the government’s various commitments regarding revenue and fiscal deficit under severe stress.
As per the Fiscal Responsibility and Budget Management Act, the Centre is committed to bring its revenue deficit to nil and fiscal deficit to 3 % by 2008-09.
The lower tax growth numbers also give a reason for the taxpayers to breath easy, as the government may not come up with any new tax proposal in the 2008-09 budget, keeping an eye on the general elections.
However, tax revenues in the very next year of polls (2009-10) is estimated to go up by at least 16.22% to Rs 6,28,867 crore which gives an indication that the new government could introduce some more taxes.