The Telegraph
Since 1st March, 1999
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Left list targets usual suspects
- Remedy for all ailments: tax the rich

New Delhi, Jan. 10: The Left has begun jockeying over next month’s budget with a 13-point wish list for finance minister P. Chidambaram.

In a note titled Resource Mobilisation, it has proposed “alternative strategies” to raise resources to fund social sector programmes instead of divesting shares from public sector undertakings.

Among the strategies recommended are higher securities transaction tax (STT) for market players, hike in capital gains tax, excise duty on diesel cars and surcharge on sales tax in five-star hotels, discotheques and theme parks.

The wish list will be placed before the government top brass at the UPA-Left coordination committee meeting on Thursday.

It carries, in a way, the Left’s official response to the Centre’s plan to divest 15 per cent shares from four profit-making non-navratna PSUs to fund projects like the National Employment Guarantee Scheme and Sarva Siksha Abhiyan.

The note suggests the government should seek special dividends from central PSUs “holding very high levels of liquid reserves”.

It says an analysis of 57 central PSUs by the Public Enterprises Survey has shown that 50 have reserves and surpluses to the tune of Rs 2,21,157 crore, which adds up to 7.5 per cent of the gross domestic product.

“But these PSUs are investing only Rs 18,805 crore,” the note points out.

The Left also recommends a “flat securities transaction tax of 0.10 per cent for both delivery and non-delivery based market transactions”.

“There is no reason to exempt government bonds and securities. The same STT rate should be imposed on them as well,” it says.

Other suggestions include:

• ad valorem (in proportion to value of) tax on capital outflow;

• excise duty on generators and captive power turbines run on diesel;

• reduction in maximum exemption limit for wealth tax;

• imposition of inheritance and payroll taxes;

• surcharge on sales tax payable at malls;

• phasing out corporate tax exemptions;

• broadening the base of service tax, particularly in information technology-enabled services.

The note begins with a call to the UPA government to reverse policies pursued by successive earlier governments.

“Not only did they abdicate their responsibility but they have also handed out largesse to affluent sections year after year,” it says. “The UPA government has to muster the required political will to reverse such policies.”

The Centre was forced to shelve the proposed divestment in Bhel after the Left opposed the proposal and walked out of the UPA-Left co-ordination committee. The latest row is again over divestment and the Left has made it clear it will not back the move.

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