K.V. Prasad

Rejects disinvesting of shares in profitable non-Navratna PSUs

A new inheritance tax with suitable exemption limit could be imposedThe Government should also consider seeking special dividends from those holding high levels of liquid reservesAuto industry is producing diesel variants for private users to take advantage of the subsidy

NEW DELHI: Having rejected the Government's proposal to disinvest shares in profitable non-Navratna public sector undertakings, the Left parties have come out with suggestions for alternative resource mobilisation. This includes payroll tax, mopping up of tax arrears, crackdown on tax evasion and recovery of non-performing assets of banks.

These are among measures considered by the CPI, the CPI(M), the RSP and the AIFB that would be finetuned and submitted to the Government shortly.

Payroll tax on employers was being suggested as a measure to fund the schemes the Government has for social security, especially for the unemployed and unorganised workers. A new inheritance tax with suitable exemption limit could also be imposed, sources in the Left parties said.

The major thrust is the Rs. 2.21 lakh crore cash reserves available with the 50 odd public sector undertakings as per the Public Enterprises Survey. Only a small number of companies have invested more than a third of such reserves while the rest made no effort, the sources said.

A part of these reserves are lent to the Government by holding securities.

The Left parties feel that the Government should also consider seeking special dividends from those public sector undertakings that were holding high levels of liquid reserves.

The suggestions under consideration include doing away with exemptions in corporate tax in a phased manner and reviewing the export incentives and duty drawback scheme in the backdrop of the foreign exchange position.

A tax on conversion of agricultural land for non-agricultural purposes and a land ceiling after which there could be no exemption of wealth tax in rural areas was under study as was the suggestion to reduce the minimum exemption limit in urban areas.

These parties disagree with the decision of the Government to do away with long-term capital gains tax and reducing the short-term capital gains tax to 10 per cent.

This, the parties felt, has encouraged speculation in bourses. The suggestions include raising the tax rate to 15 per cent in the case of short-term capital gains and a nominal tax on the long-term capital gains.

Arguing that diesel prices in India were kept low through subsidies to benefit both public transport and help agricultural operations, the Left parties were of the view that The difference in pricing between petrol and diesel has been exploited by the auto industry, which has begun producing diesel variants leading to private vehicles taking advantage from the subsidy.

The suggestion is to levy excise duty on motor vehicles run on diesel used to transport passengers except those meant for public transport, tax on luxury cars and higher rate of excise for generators used for industry and private purposes are other ideas mooted.

The growth of shopping malls is another area that could be taxed, the Left parties feel. A surcharge on sales tax could be levied on five star hotels, theme parks, multiplexes, air-conditioned restaurants and discotheques.