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Kelkar springs to defence of report

New Delhi, Nov. 14: Vijay L. Kelkar, advisor to finance minister Jaswant Singh, today defended his report on taxation changes stating the paper is on a par with the government’s efforts to improve competitiveness and reduce industry’s transaction costs to enable it compete better in the global market.

“Fiscal concessions have created an unfavourable tax-GDP ratio. In the long-term interests of the nation, the ratio should be higher. Exemptions would not allow the government to go for a long-term low-interest regime,” Kelkar said at the “International conference on India’s tax competitiveness” arranged by the Federation of Indian Chambers of Commerce and Industry (Ficci).

“The report of the task force will bring about better transparency and tax compliance. In the long run, it will help industry reduce transaction costs and become much more competitive in the global market. This is the only way that corruption in the system can be curbed,” he added.

Today’s defence of his report comes a day after the deputy Prime Minister L. K. Advani referred to the paper as “just a consultation paper” and refused to give it much importance.

The finance minister intends to work on tax reforms in consultation with the commerce ministry keeping in mind various tax reform reports already available with him including the Kelkar report, finance ministry officials said. Singh has already proposed export subsidies on sugar and coffee, which go against the recommendations made in the Kelkar report.

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