Tax collection target too ambitious: House panel

Concern over postponement of fiscal correction programme

A parliamentary committee has termed the tax collection target set out in the Budget for 2005-06 as "too ambitious" and expressed apprehension about achieving it.

The standing committee on finance also said that it was "not inclined to accept the plea given that the targeted reductions in deficits (as stipulated under the Fiscal Responsibility and Budget Management Act) could not be adhered to because of the implementation of the Twelfth Finance Commission award".

"The committee is of the opinion that apart from some uncontrollable factors, the tendency of the government to alter the rate of tax or duty structure intermittently causes unexpected downfalls in revenue collections.

"The committee advises the government to restrain from giving tax breaks too often," the committee said. "And restrict them to once in a specific period, say once a year," the report of the committee , chaired by B C Khanduri, said.

Stating that unrealistic tax targets should not be set, it said, "The committee's apprehension is that the tendency to hard press the assesses, particularly under indirect taxes, to not utilise cenvat credit, but to pay the taxes through cash payments, might increase."

Expressing concern over the postponement of the fiscal correction programme as envisaged by the FRBM Act due to the TFC, the committee said, "The additional expenditure on account of this (TFC) should have been anticipated by the government in advance and management of finances should have been done accordingly.