Sinha rules out hike in direct tax rates

LONDON, AUG 20: Finance Minister Yashwant Sinha has ruled out any hike in income and corporate tax rates in the next budget if BJP-led Na...

LONDON, AUG 20: Finance Minister Yashwant Sinha has ruled out any hike in income and corporate tax rates in the next budget if BJP-led National Democratic Alliance was voted to power and said it will work for a national consensus to rein-in on fiscal deficit

8220;I will bet against you on that raising direct taxes. If I am around, I take a bet,8221; Sinha said when challenged by leading economist Ashok Desai that he would be prepared to bet that in the next budget Finance Minister would increase direct taxes significantly.

Not convinced by Sinha8217;s bet, Desai went on to say 8220;I think he is going to raise direct taxes in the next budget8221; and to this Sinha replied 8220;I think the underlying fact is I will be around to present the next budget.8221;

Sinha was participating in BBC World8217;s quot;India business reportquot; programme which will be telecast on August 29. Other panelists in the programme were Jardine Fleming country manager Robert Gibson, economics professor from Jnu, Jayati Ghosh, CII director-general Tarun Das and Ashok Desai.

The programme moderator butted in to confirm whether Sinha was saying there will be no increase in taxes and finance minister replied, quot;yesquot;.

His predecessor former finance minister P Chidambaram carried out wide ranging direct tax reforms to bring down the income tax to a low 30 per cent at the top most slab. Sinha in his last budget did not raise income tax but introduced 10 per cent surcharge on all tax slabs to mop up around Rs 4,000 crore revenue.

Sinha8217;s observation came close on the heels of his remarks in New Delhi yesterday that any additional resource mobilisation in the wake of Kargil operation could be considered only after mid-year economic review in October.

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However, currently there was no proposal to levy Kargil tax, he said adding 8220;we would like to watch our tax mobilisation efforts and in September-October we can decide to go for additional resource mobilisation8221;.

But government would make all efforts to rein-in expenditure in other areas to meet national security requirements which came quot;first and foremost,quot; he said. Sinha also said in the programme that if BJP was voted to power it would strive for a national consensus in Parliament to enact a legislation 8220;fiscal and revenue responsibility act8221; to check fiscal and revenue deficits.

In a separate episode of the India business report to be telecast on August 23, Congress leader and former finance minister Manmohan Singh said his party, if voted to power, would hope to bring down the fiscal deficit to less than three per cent of GDP in three years.