FM rules out scrapping FBT
New Delhi, January 11
He said the economy was on course to meet the government's fiscal deficit target for the year to March 2006, which was set at 4.3 per cent of gross domestic product (GDP).
However, there is no move to completely abolish or withdrawing the FBT, Finance Minister asserted during an interaction with mediapersons at the Forum of Financial Writers. “We are open to simplify the tax, if there are any glitches in its implementation,” he said.
During their pre-Budget meeting with Mr Chidambaram, all leading industrial chambers, including the CII, Ficci and Assocham had pitched for scrapping or simplifying the FBT.
The controversial tax was introduced by the Finance Minister in Budget 2005-06 in February last year and has been strongly opposed by various industry chambers.
Referring to the opposition of the Left parties, Mr Chidambaram said: “Despite a rainbow coalition, we have achieved high growth rate of GDP in first year, coupled with reasonable inflation and creation of jobs despite the impact of high international crude oil prices, floods and tsunami.”
Economic growth in 2006-2007 would be as “good or better” than 2005-2006, though there are imponderables; oil prices, natural calamities and world output, he said.
Further, Banking Regulation Bill and Pension Reforms Bill are afoot, he said, and are likely to be cleared by Parliament soon with or without some modifications since the standing committees have already discussed them.
He asserted that disinvestment of non-navratna PSU companies was on track and appealed to the people and media to understand the logic and decision-making of rainbow coalition.
Mr Chidambaram said tax reforms had helped consumption and demand to rise, making thegovernment confident that it would meet its deficit target.
When asked whether government would consider to impose new taxes in the coming Budget, he said, “there is no need to impose new taxes if all eligible people pay taxes properly, and we will make them to pay it,” adding focus will rather be on reforms in tax administration.
“We have information that there are people outside the tax net, who have invested over Rs 2 lakh in mutual funds, are paying mobile bills in excess of Rs 2 lakh, and have spent lakhs through credit cards. We will make them to pay the taxes,” he said.
On the Budget, he said, “it will always focus on the people of India, the common man and people in the rural areas.” He ruled out phasing out of central sales tax (CST) in the near future, adding that the BJP- ruled states were likely to join the VAT regime by April 1, 2006.
On the rollback of food subsidy cut, he said, Agriculture Minister Sharad Pawar would hold discussions with coalition partners and an appropriate decision would be taken soon.