Government’s intention is to increase the revenue base but raising the taxation level could at times be a “retrograde” method, Finance Minister Arun Jaitley said on Friday. Jaitley, who also holds the additional charge of Defence Ministry, told the Lok Sabha that the intention of the government was to expand the revenue base.
“The revenue mobilisation of the states must increase, that is the primary resource that the government gets, and this is not necessarily to be done by raising the level of taxation. That could at times be a retrograde method of trying to raise the revenue,” he said.
Jaitley made the remarks while making an intervention during a debate on the demands for grants for the Defence Ministry.
“Therefore, whenever we take political positions on those issues, at the end of the day, we must realise that the size of the entire revenue cake has to increase. It is only then that the slice, which will be available for national security, will also increase,” the Minister said.
Responding to AIADMK leader M Thambidurai’s remarks that through GST (Goods and Services Tax) also, the government was reducing the revenue base of the states, Jaitley said the objective is to have a more efficient indirect taxation system.
“I know your party’s (AIADMK) and state government’s positions have been slightly different from everybody else. But one of the objects was to have a more efficient indirect taxation system which brings an end to evasion and, therefore, the revenue of the states and the Centre also increases.
“That is why we were able to develop a bipartisan consensus on it,” Jaitley said.