Need to move towards more direct taxes: Minister of State for Finance Jayant Sinha
September, 02nd 2015
Pitching for increasing tax-to-GDP ratio, Minister of State for Finance Jayant Sinha today said a more balanced tax structure with more direct taxes is needed.
"Indirect taxes are regressive and we want to move towards direct taxes. We need to have a more balanced tax structure because indirect taxes hurt the poor," he said speaking at an ORF seminar on development financing here.
Direct taxes are taxes such as income tax, which is levied on the income or profits of the person who pays it, rather than on goods or services. Indirect tax on the other hand is levied on goods and services irrespective of income of the consumer.
Sinha said tax-to-GDP ratio -- the ratio of tax collection against the national gross domestic product ( GDP), has to be increased.
"If you have to think about development financing, we cannot do with the tax-GDP ratio of 10 per cent," he said.
While the central government expenditure was $18 trillion, its revenue was $12.5 trillion and has to finance a fiscal deficit of $5.5 trillion.
"We have among the highest debt-GDP ratio. If developing countries have to sustain lofty development goals, most of it has to come from domestic inflows. If we have to finance development we have to change tax base, increase tax-GDP ratio," he said.
Speaking on measures taken to curb blackmoney, he said the foreign blackmoney bill with stringent penal provisions was brought and provisions like no cash transaction above Rs 1 lakh without a PAN card were introduced.
"You would not believe the amount of opposition we had. An extra ordinary amount of opposition we faced... For squeezing blackmoney out we are doing what no other government is doing," he said.
India through G20 is pushing for automatic exchange of information, he added.