Chidambaram may have new taxes in store for you? | Firstpost

If your daily household budgets have gone for a toss, prepare for a double whammy by as early as next month. The government has told the Vijay Kelkar committee, set up to draw up a fiscal consolidation roadmap, to look into the option of raising indirect taxes, in a bid to earn a quick buck to meet its rocketing expenditures.

And the idea to fleece the people, already reeling under sky-high prices, comes from none other than Finance Minister P Chidambaram, who had once championed a Dream Budget by cutting taxes and corporate surcharges. A few months ago, when he was not finance minister, he had proposed that the rich should pay more taxes ? the so-called Buffett tax.

The idea to fleece the people, already reeling under sky-high prices, comes from none other than Finance Minister P Chidambaram, who had once championed a Dream Budget by cutting taxes and corporate surcharges. Reuters

He had said then: ?We must raise the tax revenue to defend (the expected aggregate decline of resources). I know many people won?t like this. But I think, I can summon the courage to make the statement? you must be prepared to pay higher tax rates, especially the rich must be prepared to pay higher tax.?

The three-member Kelkar committee is likely to submit its report by this month-end, a report in The Indian Express said on Tuesday. The panel will look into steps to increase the government?s revenue as a drought-like situation is threatening to increase its expenditure this year.

It will also consider setting a more realistic fiscal deficit target and other short and medium-term steps to rein in the widening gap between the expenditure and revenue of the government, the report said.

The government has set a fiscal deficit target of 5.1 percent of GDP for this year. The deficit has already touched 37 percent of this target in just three months, media reports suggested.

The taxing idea has come even as the government is dithering on increasing fuel prices.

Experts have time and again pointed out that it is the undeserving who enjoy the benefits of discounted diesel and deregulation of fuel will make more economic sense.

However, according to the report, now increasing the prices of regulated petroleum products, namely LPG, diesel and kerosene, is a medium-term strategy. Medium-term strategy means government does not have the guts to take any decision before the next election.

A change of the duty structure on these fuels is being considered a short-term strategy, the report said quoting a government source.

This is an easy way out for the government. It just needs to restore the customs duty, which was withdrawn after a price hike last year.

And such volte-face on taxes is nothing new for Chidambram. In 2011, when Chidambaram was home minister, he had pitched for a tax on the rich.

?As finance minister till end-2008 in UPA-1, all he may be remembered for is his flip-flop on 2G spectrum auctions, but history will be kinder. Among other things, he was the progenitor of several innovative ? though flawed ? tax proposals. These include the banking cash transaction tax (BCTT), the securities transaction tax (STT) and the fringe benefits tax (FBT). He also abolished long-term capital gains tax,? an earlier Firstpost article had said.

Source: http://www.firstpost.com/economy/chidambaram-may-have-new-taxes-in-store-for-you-418041.html

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