Indian economy and and issues relating to planning : tax missed massively in cast fiscal year .
Reason ; - poor GST collections.
- Requires tax receipts to increase by around 25%.
- but witnessed only 6% in first quarter over previous year
- Govt. has offered tax rate reductions to 25% of profits to companies that do not avail of other concessions.
Result ; significant tax shortfalls in current year unless govt takes proactive measures.
Arguments against
- Government has been to or increasing GST rates which would be regressive & counter productive in slowdown
Suggestions
- MNCs should pay their fair share of taxes.
Reason ; - MNCs manage to avoid taxation in most countries by shifting their declared costs & revenues .
- IMF estimated that countries lost $500 bollion year because of this.
Result ; - creates an uneven playing field , since domestic companies have been to pay taxes that MNCs can avoid .
e.g Google is MNC company .
it establish ABC company in mauritious .
- OECD took initiates for base erosion & profit shifting this process has delivered few benefits but these are limited .
Reason ; - it has continued to operate on basis of arm's length principle of treating subsidiaries as separate entities .
ICRICT
Independent commission for reform of international cooperate tax since MNC actually function as one entity , it should be that way for tax purposes .
- only for digital companies total profits of mnc should be calculates based on scales , employment & users.
Conclusion
Indian Govt. to look at this issue seriously & take clear position at OECD meeting .
Reason
outcome will be very important for its own ability to raise tax revenues
- Govt. that is currently ineffective in batting both economic slowdown & declining tax revenues cannot afford to neglect this cricial opportunity . more public pressure is required to make govt. respond.
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