Inadequate GST tax revenue might push the government to aggressively target more tax from corporates, in a repeat of what happened in 2018-19
Invoking the analogy of an elephant that is satisfied with a small offering of rice and doesn’t trample upon the paddy fields, India’s new finance minister, Nirmala Sitharaman sought to allay fears of firms and investors who have increasingly complained of ‘tax terrorism’ in recent years.
“What the people will give in the form of tax, the government thinks that is enough; but if they don’t get that, then the government is not going to make the mistake of being the elephant and hurting the public; and the government also won’t get anything,” said Sitharaman in a post-budget interview. “We will do with what we have been able to collect as tax from the public.”
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However, the assumptions underlying the revenue projections for the ongoing fiscal year have raised fears that the era of a rampaging tax bureaucracy may not be over yet.
Notwithstanding downward revisions to its tax estimates in the recent budget, the government continues to project an impressive 18% growth in tax revenue in 2019-20. If realized, it would be the fastest growth in tax revenue in a year since 2010-11. In other words, the government expects the gross tax-to-GDP ratio to climb to its highest level since the 2008 global financial crisis at a time when concerns of economic slowdown have intensified.
Source: Livemint
