Finance minister P Chidambaram on Monday virtually ruled out any changes in the income and corporate tax rates, saying he will steer clear of proposing legislative changes when he presents the vote-on-account in Parliament in a fortnight. The poll-bound government has given up on key economic reform bills, such as insurance, goods & services tax and Direct Taxes Code, which have been pending in Parliament for years, the impact of which will be felt on the slowing economy.
At the same time, he said the government will change the customs and excise duty rates, if need arises, as they do not require legislative changes, but can be done by issuing a notification.
"In 2004, Mr Jaswant Singh made a 12-page speech. In 2009, Mr (Pranab) Mukherjee made an 18-page speech. So, I have two numbers to choose from between 12 to 18. We can make any proposal short of amending any law. We cannot propose amendments to the Income Tax Act, Customs Act or the Excise Act. But, any proposal short of amending a law can be made. We can also outline vision for the future," Chidambaram told a press conference, while adding that he will prefer a debate in Parliament.
"We have made a couple of changes (in indirect taxes) last week. We will continue to make those changes until the term of this government if they do not require Parliamentary legislation or sanction. We will have to notify the changes and place the notification in Parliament."
Chidambaram is due to present the vote-on-account on February 17 to enable the government to spend till a new government is sworn in and presents a full Budget in late-June or early-July. Typically, finance ministers have refrained from tinkering with tax rates although in 2004 Singh had indicated the focus areas for the BJP if it returned to power. But weeks before that, he had announced major changes in customs and excise, while offering sops on the direct tax front.
In 2009, Mukherjee did not issue any statement of intent although on January 2, he announced changes in the customs duty.
On the legislative business, Chidambaram said the Insurance Bill, which seeks to raise the FDI cap from 26% to 49%, is unlikely to be taken up during the forthcoming Parliament session scheduled to begin from February 5, the last in the current Lok Sabha. "In the Insurance Bill, they (opposition parties) have made it very clear it will not pass it (in the upcoming session)", he said, adding that there is no consensus among states on the Goods and Services Tax (GST).
Asked about the Sebi Amendment Act, which aims to empower the capital market regulator to effectively crack down on ponzi and other illegal collective deposit schemes, Chidambaram said, it is very high on the priority list as the government has resorted to promulgating Ordinances twice. "We will be doing great disservice to thousands of depositors whose money is stake at collective investment schemes, which were not adequately regulated. It's imperative that this bill is passed."