Debating India
Home page > Public directory > Social and Economical Issues > VAT impasse: Sinha blames UPA

VAT impasse: Sinha blames UPA

Sunday 3 April 2005

By Our Staff Reporter

CHENNAI, APRIL 2. The non-implementation of the Value Added Tax (VAT) regime in the Bharatiya Janata Party-ruled States was due to "politics of economics," said the former Union Finance Minister, Yashwant Sinha. He said "there are issues beyond economics, and into the realm of politics."

JPEG - 13.2 kb
Photo: S.R. Raghunathan
WHAT’S VAT: The former Finance Minister, Yashwant Sinha, speaking on the budget at a function organised by the Palkhivala Foundation in Chennai on Saturday.

Addressing meetings on budget-making and the implications of the last budget, organised by the Madras Chamber of Commerce and Industry and the Palkhivala Foundation here today, Mr. Sinha blamed the attitude of the Congress-led United Progressive Alliance (UPA) Government at the Centre for the impasse, and said "they cannot have confrontation with leading political parties and expect complete harmony and consensus. It will not happen."

If the UPA was serious about the uniform implementation of the VAT, it must adopt a non-confrontationist approach in politics, he said, adding that even after the BJP announced that its Chief Ministers would not adopt the VAT regime from April 1, neither the Finance Minister nor the Prime Minister thought it fit to contact the BJP and enter into a dialogue, Mr. Sinha regretted.

"With the complete breakdown of any dialogue, I am extremely worried about the future economic scenario," the senior BJP leader said.

He, however, maintained that the VAT was a "very good" scheme, but there remained many issues, which still bothered people.

"We need dialogue and discussion. It is incumbent on the Government of the day to invite Opposition leaders for dialogue. There is absolutely no dialogue between the UPA and the National Democratic Alliance," he added. Lashing out at the Finance Minister, P. Chidambaram, Mr. Sinha said the Cash Transaction Tax (CTT) was a "mad tax," while the Fringe Benefit Tax (FBT) was a "completely outrageous tax." Mr. Sinha said, "I am at a loss to understand how enforcement agencies would be able to keep track of black money by this tax. The CTT should be completely eradicated and it has no relevance to India."

Already all banks have to report to the Reserve Bank of India in case of any unusual transaction, and enforcement agencies have already been empowered to approach banking institutions for details.

"The CTT will bring him some revenue, but will create a lot of hassles for people and banks."

Faulting the scrapping of the standard deduction, Mr. Sinha said the increase in the income tax ceiling did not bring any relief to the salaried people. After being taken in by the announcement in Parliament, they needed to pore over the fine prints of the Finance Bill to realise that "they had been taken for a ride." He said it involved a major ethical question, and wanted Finance Ministers not to camouflage their tax proposals.

Murali Venkataraman of the MCCI presented a memento to Mr. Sinha, while V. Ranganathan welcomed guests at the Palkhivala Foundation.

SPIP | template | | Site Map | Follow-up of the site's activity RSS 2.0