New Delhi: To reduce dependence on oil as a revenue source, Union minister Arun Jaitley on Monday urged citizens to pay their due share of taxes “honestly” as he virtually ruled out any cut in excise duty on petrol and diesel saying that it could prove to be counter-productive.
Jaitley said while salaried class pay their due share of taxes, “most other sections” have to improve their tax payment record, which is keeping India “far from being a tax-compliant society”.
“My earnest appeal, therefore, to political leaders and opinion makers would be that evasion in the non-oil tax category must be stopped and, if people pay their taxes honestly, the high dependence on oil products for taxation eventually comes down. In the medium and long run, upsetting the fiscal maths can prove counter-productive,” Jaitley said.
In a Facebook post titled ‘The Economy and the Markets Reward Structural Reforms and Fiscal Prudence’, Jaitley said that 7.7% growth in the March quarter has “firmly” established India as the fastest growing major economy and the future looks much brighter. Jaitley said that with structural reforms like demonetisation, the implementation of GST and the enforcement of the Insolvency and Bankruptcy Code, the country had two challenging quarters.
“Those who predicted a 2% decline in GDP growth have been conclusively proved wrong,” he said in the FB post.
In last four years, central government’s tax-GDP ratio has improved from 10% to 11.5%. Almost half of this, 0.72% of GDP, accounts for an increase in non-oil tax-GDP ratio.
The level of non-oil taxes to GDP at 9.8% in 2017-18 is the highest since 2007-08 – a year in which our revenue position was boosted by buoyant international environment, he said.
“This government has established a very strong reputation for fiscal prudence and macro-economically responsible behaviour. We know what happened during the Taper Tantrum of 2013. Fiscal indiscipline can lead to borrowing more and obviously increase the cost of debt.
“Reliefs to consumers can only be given by a fiscally responsible and a financially sound central government, and the states which are earning extra due to abnormal increase in oil prices,” Jaitley said.
In an apparent dig at former finance minister and senior Congress leader P Chidambaram’s remark that tax on oil should be cut by Rs 25 per litre, Jaitley retorted “this is a ‘trap’ suggestion”.
Without naming Chidambaram, Jaitley noted that the “distinguished predecessor” had “never endeavoured to do so himself.”
“It is intended to push India into an unmanageable debt – something which the UPA government left as its legacy. We must remember that the economy and the markets reward structural reforms, fiscal prudence, and macro-economic stability.
“They punish fiscal indiscipline and irresponsibility. The transformation from UPA’s “policy paralysis” to the NDA’s “fastest growing economy” conclusively demonstrates this. The government is aspiring to improve the tax-GDP ratio,” Jaitley said.