Editorial
How do we get resource for poverty alleviation?
Answer lies in expanding the tax net
THE finance minister has indicated that in order to generate much-needed revenue for the public expenditure that will be necessary in these tough economic tines, the government plans to increase taxes on luxury goods, and also items that carry a health risk such as cigarettes.
What is more important, he has announced his intention to widen the tax net to ten lakh from the current seven.
We think that these are the right steps to take and fully commend the government for its approach, which we think are precisely what is needed if the government is to play a pro-active role in providing social welfare, as we feel it must.
In these uncertain economic times, it is more crucial than ever that the government not abandon its commitment to the most disadvantaged in society, and that there be no shortfall in funds for poverty alleviation and social welfare expenditure.
Revenue must come from somewhere. We are not against luxury items per se, but in tough economic times, it makes sense for the government to seek to raise revenue primarily from those who can afford it. Similarly, the situation calls for a degree of sacrifice on the part of rich consumers to strengthen the hands of the government.
Ultimately, what needs to be done is that more people must be brought into the taxpayer net. Ten lakh taxpayers is a huge improvement over seven, but it is still shamefully low for a country of 140 million plus. In fact, our tax-GDP ratio is dismally low and must be raised.
In addition, measures need to be taken to streamline and automate the tax administration system to ensure that evasion is kept to a minimum.
If all these measures are taken, there is no reason why we cannot see a large increase in tax revenue in the near future, which is precisely what the economy needs.
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