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Govt needs to reduce income tax rates to boost economy: E&Y
May, 12th 2009

Setting the agenda for the new government, global consultancy firm Ernst and Young (E&Y) today said that the government should reduce corporate and personal income tax rates to boost the economy facing the ripple effects of global financial meltdown.

"The new government would do well to introduce measures such as providing for carry back of losses, possible reduction in corporates and personal tax rates -- perhaps by doing away with surcharge," the tax consultancy firm said in its study on key tax trends in fiscal stimulus packages across the world.

The government, as part of the stimulus packages to boost the economy, had reduced indirect taxes but did not announce any changes in the direct tax rates.

In view of the general elections, the government came out with an interim budget in February for fiscal 2009-10. The final budget will be tabled in the Parliament by the new government after completion of the ongoing general elections.

Referring to the steps that the new government should initiate in the final budget, the E&Y report said, "While we have seen in the past tax policy measures such as streamlining of tax rates, increase tax depreciation... Progressive measures must also be introduced."

 
 
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