Concerned over low tax-GDP ratio, Home Minister P Chidambaram has pitched for higher taxes on luxury products and imposing inheritance tax. Chidambaram, who is a former finance minister, had expressed these views at the full Planning Commission meeting headed by Prime Minister Manmohan Singh last month.

“We are really underestimating our capacity to raise resources, especially tax resources. Since non-plan expenditure is difficult to contain, the tax-GDP ratio must be raised especially by taxing conspicuous consumption and imposing inheritance tax,” Chidambaram had said.

According to the minutes of the meeting held on April 21, the Home Minister had also underlined the need for streamlining the manufacturing sector to generate more jobs.

The Plan panel has proposed to raise the tax-GDP ratio from projected 7.7 per cent in the 11th Plan (2007-12) to 8 per cent in 12th Plan (2012-17). It also wants the ratio to be raised from estimated 7.2 per cent in 2011-12 to 8.8 per cent in 2016-17, terminal year of the 12th Plan.

Chidambaram also talked about improving the management of the public sector undertakings and made a case for providing security of tenure to managers and officials in energy and infrastructure PSUs and ministries.

During the meeting Planning Commission has proposed to raise average economic growth of 9 to 9.5 per cent during the 12th Plan period from a likely 8.2 per cent in the current five year plan.


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  1. J says:

    Concerned over low tax-GDP ratio, Home Minister P Chidambaram has pitched for higher taxes on luxury products. “We are really underestimating our capacity to raise resources, especially tax resources” – this is called crocidile tears

    no additional sources are required, it is enough to concentrate on existing sources & plug holes. that will contribute much much more than identifying new levies. Example, if concern for GDP ratio was true, two firm steps can remarkably improve the ratio.

    1. (think twice before granting huge tax exmeptions)
    2. Be firm with tax evaders, especially the most powerful.

    Pl see below a sample of tax exemption statistics (in a period of JUST TWO MONTHS) given to affluent bodies & citizens
    31.03.2011 – Govt grants Rs 45 crore I-T bonanza to cash-rich ICC – a controversial decision of giving tax bonanza of nearly Rs 45 crore to the International Cricket Council (ICC) by exempting part of its income generated in India from Income Tax.
    27.05.2011 – ICC Cricket World Cup, 2011 notified as International Sporting Event under section 10(39) – NOTIFICATION NO. 28/2011, DATED 27-05-2011
    25.05.2011 – Sachin Tedulkar can claim deduction u/s. 80RR on advertisement Income

    such affluent people earn in crores & crores of ruppees, & have to be committed to pay back to the country, BUT enjoy tax exemptions.
    on the other side, there is a similar MUCH LONGER list on tax evasions by the most influential & wealthiest people in the country on whom the govt turns a blind eye.
    There is crores & crores of money going out Govt’s exchequer & everyone including public is fully aware. While no action is taken to plug these silly / unfair exmptions as well no action against powerful tax evaders, Govt cries of poor finances & GDP.
    We are helplessly loosing in pounds ( in trillions of pounds) & scrathing for pennies ( a few lakh pennies).

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