Strongly criticising Finance Minister P. Chidambaram’s initiatives to “regain the confidence of all stakeholders’’ announced earlier this week, the Communist Party of India (Marxist) has said the measures announced were meant to help multinational companies non-payment of tax on assets they acquire in India and to facilitate tax avoidance by foreign and Indian corporates.
In a statement issued here, the CPI (M) Polit Bureau said the Finance Minister has made his intention clear to reverse the retrospective effect in the tax law. This retrospective provision was in the Finance Bill which was adopted by Parliament. No change can now be made without the Parliament’s approval, it said.
“Reversing this measure means helping Vodafone to avoid paying a tax claim of Rs. 12,000 crore on acquisitions in India. Other step announced is to review the General Anti Avoidance Rules (GAAR) which was meant to plug the loopholes which enable tax avoidance by companies using the Mauritius route,’’ the statement said.
Mr Chidambaram had announced a roadmap for reversing last two years’ moderate growth which included tackling high inflation, possible cut in interest rates, a progressive tax regime and financial consolidation through modification or fine-tuning of policies.
The CPI (M) said that the Finance Minister has set out a neo-liberal package of measures which seeks to reverse the decisions taken by Parliament and his own government.
It is obnoxious to argue that in order to regain ‘investor confidence’, tax laws should be so amended as to violate principles of national justice in order to provide avenues for profit maximization at the expense of public revenue, the party statement pointed out.
The Polit Bureau demanded that the government implement the retrospective provision in the law and work out effective rules under the GAAR.