The Taxation Laws (Amendment) Ordinance, 2019 and The Taxation Laws (Amendment) Bill, 2019, as passed by Lok Sabha

DR. AMAR PATNAIK (ODISHA): Mr. Deputy Chairman, Sir, I have looked at this Bill from a perspective of short term, medium term and long term. In the early 90s, the Chelliah Committee recommended bringing down the corporate income tax from between 51.75 and 57.5 per cent to 45 per cent. It was brought down to 40 per cent, and then, further to 35 per cent in 1997-98. Then, the Shome Committee in 2001 and the Kelkar Committee in 2002, in their recommendations, brought it down to 30 per cent. Subsequently, it has been brought down to 25 per cent. And, now, the hon. Finance Minister has brought it down to 22 per cent. In the case of manufacturing, it has been brought down to 15 per cent. So, contrary to what Jairam Rameshji said, I think the long-term movement is in line with the policy that we have been following in this country, that the corporate income tax has to come down. As far as the timing is concerned, to take advantage of the trade war between India and China, if it has come a little too earlier-- if the Finance Minister was probably thinking to bring it later -- I think it could have been done probably even earlier, during the Budget Session itself. So, in terms of the long-term stability, I think this is the right thing that we have done in terms of bringing forward this Bill. But, as far as fiscal stimulus is concerned, whether it would prop up the economy and will boost the demand, I think, I will come to that later. I just have a quarrel about the exclusion from application of the provisions, the reduced tax rates, to the mining sector which contributes about 2.39 per cent of the GVA in 2015 as per the CSO data. I am concerned because most of the Odisha’s economy is dependent on this particular sector. If there is a spurt in the mining activity, I think the economy of the State would greatly get impacted. So, my request would be to probably include this in the manufacturing sector to get the benefit of 15 per cent. Also, why this has been excluded is not mentioned in the Statement of Objects of the Bill. Sir, now I will come down to the companies who are going to get benefit in terms of the effective tax rates. Sir, a calculation of the effective tax rate after deductions rightly shows that 69 per cent of the total income tax is paid by 29 per cent of the 8.4 lakh companies, and they would get the benefit. But then there are about five per cent of the companies who contribute 22 per cent to the share in the total tax paid. They are currently paying 20 per cent to 25 per cent. They are not likely to shift to the new regime because their effective tax rate is anyway lower than 25.17 per cent that they are going to pay. Sir, the concerns about the New Tax Bill are these that because of this, the MSMEs may be left out. Then the second, the demand side has not been addressed, the consumption side not addressed, pump-priming the economy by increasing Government expenditure on roads and houses and other things probably could have been thought of as an additional thing to fiscal measures. Therefore, I would say that in the immediate and the short term, maybe, it will not help to prop up the economy. I am sure that with the lag effect gone in the future quarters, the impact would be seen in terms of improving the economy. Another concern of our State is that if the divisible pool of taxes will come down, then the allocation to the States would come down and the States like Odisha would be greatly affected. The cess and the surcharge which are now not a part of the divisible pool, the hon. Finance Minister is requested if she could consider bringing it under the divisible pool given the circumstances that the tax collections overall will not be improving in 2019- 20, or, even for that matter, 2020-21 Sir, the fiscal deficit target, many people have said that it would be offset by about 0.7 per cent. But I have a feeling that the forgone tax, whatever deductions in the form of deductions would have been forgone, would have been Rs. 1.13 lakh crores. So, the impact on the fiscal deficit would not be much. ...(Time-bell)... On the States, as I said, I would probably request that in case of disaster-prone States like Odisha, despite whatever happens in the economic situation, the transfers should continue despite the collections. Thank you so much.