Parthasarathi Shome should be commended for his article “A time for tax reform” (February 20). The falling tax-to-GDP ratio is certainly a matter of worry, particularly if one considers the fact that about 30 per cent of income escapes tax. Though tax reforms will certainly help, the focus on large tax units (LTUs) may not be fruitful. Even if the direct and indirect tax authorities don’t object to losing their exclusive domains, big tax leakages are not restricted to big, organised industries anymore. A reason for the drop in the ratio could be the rise in the mining and service sector components of the GDP. In mining, one has witnessed massive illegal mining of iron ore. The coal sector is also witnessing something similar. Leakages in revenue collection in other services including education, health, consulting, transport, event management, tourism, security and so on can also be significant. This is also true of the real estate sector. A third clue could be the amount of gold imports. If the gold trail is followed from importers to final buyers, one should be able to get significant revenue. All this does not require a change in tax laws or rates just an honest and efficient tax administration.
P Datta, Kolkata
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