The Telegraph
Since 1st March, 1999
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BJP rethinks hard line on tax report

New Delhi, Jan. 9: There is a growing view in the BJP that the earlier trenchant criticism of the Kelkar committee on tax reforms should be “substantially” toned down and, “if possible”, the party should give the impression that the report had several “commendable” points that it should “appreciate”.

A meeting of the drafting committee, comprising Rajnath Singh, P.N. Vijay and Jagdish Shettigar, which was to take place today, was put off ostensibly because Singh was preoccupied with political engagements relating to Uttar Pradesh and the Assembly elections.

The BJP had appointed a nine-member committee, headed by Singh, to study the Kelkar report and offer the party’s views and suggestions. The drafting committee was to submit its report to BJP president M. Venkaiah Naidu this week.

However, sources said the exercise could stretch a little because of perceptional differences on how far the party should take its criticism.

The sources said the drafting committee was advised by senior members to go easy. Some of them rushed to the party headquarters this afternoon, presuming that the report was ready. One of them, a Lok Sabha MP, said on condition of anonymity: “There are several good points in the Kelkar report and the party should take advantage of these instead of trashing the whole thing. The spirit of our report should be supportive instead of being critical.”

Mumbai MP Kirit Somaiyya said: “The finance minister has done a commendable job by constituting a committee whose approach to tax reforms is transparent. If some corrections are needed, we can give these in the form of suggestions but there is no need for sharp criticism.”

The sources stressed that whatever negative views were expressed earlier by committee members like Shettigar were done in their “individual capacity” and should not be taken to reflect their collective viewpoint.

It appeared that anti-Kelkar members like Shettigar, Singh and Arun Sathe might get marginalised in the final analysis, though the first draft by and large mirrored their views.

A dissenting note was penned by a member, who felt that Kelkar should be backed on the abolition of the dividend tax in the hands of the recipient and the 10 per cent long-term capital gains tax which, he believed, were crucial to the revival of the stock market sentiment and the return of small investors.

The dissenter also wrote that long-term capital gains were something that affected FIIs in a big way.

The anti-Kelkar opinion was that there was no point in doing a “balancing act” because “we are concerned with our support base of the common man and development of all sections”. Their answer was that dividend distribution tax should be imposed on companies as former finance minister P. Chidambaram had done.

However, even this section acknowledged that Kelkar’s recommendations on modernisation of the tax administration, hiking of the exemption limit, additional exemption limit for senior citizens and simplification of tax rates and slabs were “welcome”. “But as against four good points there are 15 negative proposals and this is why we opposed the report,” said a member.

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