To tide over the current fiscal crunch, the Left parties have suggested that the base of direct tax should be increased and the possibility of a presumptive tax be explored. They want these measures taken instead of the increase in petrol and sugar prices that have been proposed.
Taking part in the marathon United Front (UF) steering committee meeting on Thursday evening, Left leaders said that there were many loopholes in the present tax system and only one per cent of the countrys population was in the tax net.
They also argued for the continuation of minimum alternate tax (MAT) and said that zero tax paying companies should be made to pay taxes.
Left leaders who took part in the discussion included Communist Party of India (Marxist) general secretary H S Surjeet, West Bengal Chief Minister Jyoti Basu, politburo member Sitaram Yechury, Communist Party India general secretary A B Bardhan and secretary D Raja. Both the general secretaries suggested these alternative resource mobilisation strategies.
Their colleagues joined them to say that the common man had already been overburdened with the recent spurt in the prices of essential commodities and there was no need to hike the prices of petroleum products as it would further fuel inflationary pressures.
The issue of increasing the price of levy sugar was also discussed and the committee decided that, unless the prices of essential commodities were brought down, the government must not allow it.
Basu categorically stated that even though there was enough justification for increasing the prices of these items, the government should not do it.
Surprisingly, finance minister P Chidambaram echoed these views and blamed the previous government for the situation. He said that the prices of petrogoods were recently increased and there was no justification for doing it again in the same financial year.
Chidambaram also blamed the Congress for the situation on the sugar price front. He said that, by convention, sugar levy prices used to be announced on February 1, but his predecessor, Manmohan Singh, did not do it since 1994. Under these circumstances, while the cost of sugar production had gone up to Rs 12 per kg, the price of levy sugar worked out to Rs 9 per kg.
It was at this point that Left leaders spoke of generating alternate resources. Bardhan mooted the idea of imposing presumptive taxes.
He said that many companies and professionals, like doctors and lawyers, did not pay taxes by fudging figures. It was imperative that such persons should be taxed, he argued.
The presumptive tax would be levied on the presumed productive capacity of companies or individuals and it would leave very little room to evade taxes, he argued.
