New Delhi, Jan 9 (UNI) The country's top economists today suggested for a cut personal tax and rationalise excise taxes and rising subsidies.
Industry leaders yesterday suggested the same reduction in corporate tax, income tax and excise duty and urged the Minister to move ahead in financial sector reforms.
The economists, who had a pre-budget meeting today with Finance Minister P Chidambaram, said the increased collections should not be taken as permanent since the government had big ticket spending coming up, like pay rises to over three million government workers when the pay panel submits its report in April.
Standard and Poor's Chief Asia Pacific economist Subir Gokarn said, ''given the circumstances that there are a lot of fiscal stress points in the offing like oil bonds, pay commission and market stabilisation scheme bonds, it may not be prudent to take this as a permanent feature in tax-to-GDP ratio.'' Between April and December, the country's personal tax collections had risen 50 per cent to Rs 2.05 trillion, while corporate tax collections have expanded 40 per cent.
While some economists were of the view that the government should use the rise in collections to clean up the fiscal deficit and also to repair the country's infrastructure.
''We suggested that the government should not touch the personal income tax rates. If you have buoyancy in tax revenue, it should be used to increase infrastructure spending or rationalise indirect taxes,'' Indian Council For Research on International Economic Relations Director Rajiv Kumar said.
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