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          However, empirical evidence is inconclusive about how corporate tax burden is shared between capital and labour. It is interesting to recall here that Mr. Pinaki Chakravorty in 2016, while analysing the Budget, had said, ‘any tax reform in corporate sector to rationalise the tax structure without tax exemption would also mean effective tax rate going up for those paying lower than the intended statutory rate.’ It means the corporate tax cut is effectively only 2.7 per cent and not eight per cent. The estimated revenue impact of Rs.1.45 lakh crore, if it comes to pass, can reduce the tax-transfer share to the States. Recently, the Finance Minister of Kerala, Mr. Thomas Issac, has come out very openly and he has said that it will, in turn, affect the State’s fiscal space. This needs to be addressed. I think a number of Finance Ministers of respective State Governments also will be talking to the Finance Minister of the Union Government. The impact on the fiscal deficit of CIT and other reforms for 2019-20 would depend on a broader set of factors. Relating to the Budget Estimates, downward adjustments are required for all the Central taxes since the base year figures of 2018-19 as well as nominal growth and assumed buoyancy numbers appear to be out of alignment.

          Secondly, the revenue cost of the CIT reforms and its earlier announcements relating to the export incentives, which is about Rs.50,000 crore, should be provided for. On the positive side, we need to take into account the effect of RBI’s additional dividend. The impact of the changes in corporate tax rates depends primarily on how the tax benefits will be utilised by the corporate sector. If the additional profits are utilised to increase capital expenditure, corporate investment will go up and spur production in the future years. On the other hand, if the benefits are converted into additional dividends, it will give a demand side effect. There will be a pick-up in demand and this may have a more immediate effect. I do not think the Government is in a position today to estimate what impact it will have in the current year.

          The other question is about fiscal deficit. A lot has been said about it. There are only three months left for the next Budget. Inflation is going up. Even food inflation has gone up. So, how are you going to stop it? How  are you going to control it?

          You have reduced corporate tax which is a welcome step. But in income tax there are brackets which are still at 42 per cent. Now, these are people who have very good accountants with them. I am not challenging  your intelligence. But at the same time think about it logically. The corporate tax is reduced to 24 per cent vis-à-vis 42 per cent of that bracket, you are actually encouraging people to do jugglery. What is the point of having this? Again, after some time, you will come up with another Bill to change this. Why can we not have a holistic approach of having complete tax reforms in the country at one time? Why are you bringing it piece by piece?