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Wednesday, January 8, 2014

BJP plans to abolish Income and Service Taxes

 


If voted to power, may also do away with Service Tax to woo middle class
The abolition of Income Tax and Service Tax may figure prominently on the agenda of the BJP for the 2014 Lok Sabha polls. The party feels that this could be a major step to woo the middle class — its traditional support base — which deserted it last time in 2009 and voted for the Congress.

At a meeting here on Thursday to finalise its blueprint for major structural changes in the taxation regime, the party leaders agreed to do away with Income Tax and Service Tax. The decision would form part of the BJP’s Vision Document-2025, which is under preparation and is scheduled to be released before the Lok Sabha elections.

According to the Finance Minister’s Budget proposals for 2013-14, Income Tax is expected to be over Rs 2.47 lakh crore while Service Tax is estimated to be over 1.80 lakh crore.
Tax on income is the levy on the income of individuals, firms etc, other than companies. This head also includes other taxes, like education cess, surcharge and Securities Transaction Tax, which is levied on transaction in listed securities undertaken on stock exchanges and in units of mutual funds.

The party also plans to implement radical changes in “petro-economics” bringing taxation on petroleum products in India at par with international standards.

The BJP leaders claim once this is done, petrol and diesel prices in India would come down drastically. “The Vision Document committee felt that petroleum products were highly taxed in India and there was a need to rationalise this. There was a possibility that we could bring petrol prices in India in the range of Rs 40-50 per litre,” senior leaders claimed.

The proposal to abolish these two taxes was discussed at a meeting of top BJP leaders here at the residence of LK Advani. Leaders of Opposition Sushma Swaraj and Arun Jaitley, party president Rajnath Singh, former chief Nitin Gadkari, former Finance Minister Yashwant Sinha and senior leader Subramanian Swamy were present in the meeting. 

“This has approval of prime ministerial candidate Narendra Modi. The matter was brought to his notice a couple of days ago and he has given the go ahead,” a top BJP leader told The Pioneer.

A Pune-based institute is said to have done the study and recommended abolishing these taxes to the party’s vision document committee. While Gadkari heads the committee, Swamy is the convener of the panel.

The panel has pointed out that there were 15 other countries in the world, which do not impose taxes on income of individuals. It has cited certain studies, which show that among 180 countries, India is ranked at 138 in terms of tax administration.

There were certain apprehensions in the BJP camp about the “financial impact” of abolishing these taxes, but a consensus has been arrived at that it could be minimized by taking steps that would not pinch the aam aadmi much.

Party leaders feel a certain amount of the total loss on account of abolishing these taxes could be recovered through banking transaction taxes and a radical reform in the taxation regime. They feel, this step alone could mop up nearly Rs 40,000-crore.

The vision document of the party would suggest reforms in revenue collection methods by plugging leakages. It would also suggest more collection under heads like excise taxes.
The party is also mulling a series of reforms, if voted to power, in revenue collection and management of natural resources to mop up additional funds.

Panacea for tax woes
* The decision would form part of the BJP’s Vision Document-2025, which is under preparation and is scheduled to be released before the Lok Sabha elections
* According to the Finance Minister’s Budget proposals for 2013-14, Income Tax is expected to be over `2.47 lakh crore while Service Tax is estimated to be over 1.80 lakh crore
* Party leaders feel a certain amount of the total loss on account of abolishing these taxes could be recovered through banking transaction taxes and a radical reform in the taxation regime. They feel, this step alone could mop up nearly `40,000-crore
* The party also plans to implement radical changes in ‘petro-economics’ bringing taxation on petroleum products in India at par with international standards.

Source: http://www.dailypioneer.com/