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Therefore, blind adherence to the outdated, economic concepts like the one of Laffer Curve should be done away with. I hope that the Finance Minister’s wishes of greater tax inflows as a consequence of various tax reforms actually come about. I wish that there is an informed body of opinion that feels that the tax reforms proposed may actually increase compliance costs. If the Department wishes to attain it through more and more of smaller tax payers, the compliance cost becomes higher. International experience indicates that mere reliance on automation without organisation and incidental reforms particularly related to incentive structures of tax officials are not likely to succeed. I am sure our Finance Minister is aware of these concerns.

That is substantially, 30 per cent, higher than what we have got in the previous year. In the last few months, we have brought in the tax reforms. We have brought down the corporate tax from 35 per cent to 30 per cent. We have simplified the tax structure for individuals and raised limits of exemptions for individual taxpayers. In spite of these concessions, there has been a remarkable increase in the last few months in tax revenues when compared to the corresponding period last year.

At the same time, when it comes to customs and excise duties, we have reduced the peak rates of customs from 20 per cent to 15 per cent. We have reduced excise duty rates from 20 per cent to 8 per cent, 5 per cent and 10 per cent in various sectors – be it textiles, be it steel, materials, pharmaceuticals, biotechnology, IT and telecom equipment, drinking water equipment or anything. We have kept reducing the rates. This budget has substantially reduced all the taxes, both customs duty and excise duty, and also raised the limits of exemptions on income tax both for corporate sector and also for individuals.

As regards tax reform, there is a need and there is also a potential to increase our revenue substantially. A sum of Rs.3,70,000 crore is not a big amount. The potential is much more, three times to four times more. It is not that there is no money in the country. The only thing is that we have to see that people comply with the tax system.

In fact, if you look at the situation today, even tax evasion costs 15 per cent. That means, people have a tendency to evade any rate above 15 per cent. That is the reason why we have brought the rates down from 90 per cent to 30 per cent. I am sure in the coming days, if the revenues go up, our Finance Minister will try and further reduce the tax slabs, and also increase the exemption limits. That is because any exemption that has been given goes back into the system for purchasing equipment and households goods. In turn, indirect tax revenues increase in the form of excise duty and customs duty.

About the income tax proposals, if I take up one by one, there is a claim that there is a change in the tax regime, tax reforms both in terms of the rate and also in terms of the slab. The Government claims that a very important change has been made with regard to the tax philosophy also. I do not agree to that because the richer the people, the greater the income and larger the benefit as a result of the concessions given in the name of simplification of tax reforms. I shall come to that later.