News Analysis India

Tag: PMEAC

  • Slash oil tax, says worried committee advising Prime Minister

    By Express News Service
    NEW DELHI: Amid growing disquiet over high fuel prices, the Prime Minister’s Economic Advisory Council (PMEAC) has suggested to the government to take a political call on taxing oil, warning it could otherwise build inflationary pressure, and its spill-over impact would dampen consumer sentiment and dampen recovery. “Petrol and diesel price cannot be used as cash cow forever.

    Some political intervention is required as it will finally dampen the consumer spending and will delay the recovery. A delay in intervention will prolong the recovery process. Focus needs to be on promoting growth of industry and jobs,” a senior member of the PMEA C told this newspaper. The member added that recovery will be fragmented if private consumption is not stepped up.

    Similar concerns were raised recently by the Reserve Bank of India, as gleaned from the minutes of its monetary policy meet. “The rising trajectory of international commodity prices, especially of crude, together with logistics costs, pose upside risks to the inflation outlook. Excise duties, cess and taxes imposed by the Centre and states need to be adjusted in a coordinated manner to contain input cost pressures emanating from petrol and diesel prices,” the minutes said.

    “Timely supply side policy measures with regard to petrol and diesel, edible oil and pulses, among others, would be critical to bringing about a durable softening of price pressures,” the RBI added. High fuel price and food cost pushed up retail inflation, measured by the consumer price index (CPI), to 6.3% in May, overshooting the RBI highest band of 6%.

    Even the wholesale price inflation has reached 12.94%, highest since 2013, pushed mainly by fuel and power inflation, which was up by 37.6% in May. Experts claim this will make things difficult for the RBI. Petrol and diesel prices are at all-time highs though crude oil fell nearly 2% from its highest level this year on June 17 to $72.23.

    Further jumpPetrol and diesel prices were on Friday increased again by 27 paise and 28 paise, raising their cost in Mumbai to Rs 103.08 and Rs 95.14 per litre

  • Fresh push for 1-time hike in corporate tax

    Express News Service
    NEW DELHI:  A controversial proposal to tax the rich is back on the table, with a section of the Prime Minister’s Economic Advisory Council (PMEAC) strongly pushing to impose additional tax for a short period to make up for the revenue loss during the pandemic.

    “In the internal economic review meeting, many members of the PMEAC had suggested that many countries are using wealth tax to compensate for revenue. The proposal was that India can reconsider it for companies that are resilient or had posted a healthy double-digit growth as one-time measure,” a senior finance ministry official, who was aware of the meeting earlier this month, said.

    The meeting was attended by officials of the finance ministry, the Prime Minister’s Office (PMO), PMEAC and Niti Aayog. Some officials of the finance ministry are also in favour of the proposal, the officer said. This is not the first time the rich tax has been mooted. When the proposal to slash corporate tax was first drafted, it had a wealth tax component on high profit earning firms. But in the final draft by then revenue secretary Ajay Bhushan Pandey, the wealth tax clause was dropped.

    Ahead of this year’s budget, the proposal was back on the table but was decisively rejected by the PMO, which wanted to present a business friendly image. According to Karthik Natarajan, partner, Bhuta Shah & Co. LLP, “The temptation, however easy, to load the thrust of taxes on a section of economic citizenry may best be avoided as the corporates are an inseparable part of the society and have larger contributions to make in terms of productive deployment of the factors of production.”

    Demand to tax the rich growing globallyThe demand to tax the rich has increased globally, especially at a time when the income divide has widened during the pandemic with a large number of middle class people pushed into poverty while the ultra rich are getting richer