New Delhi:
Former Finance Minister P Chidambaram said his party Congress had to speak for the common people as the government was bringing GST to favour the corporates. The common people were the "third factor" besides the Centre and states, that would be affected by taxes.
Thus the rate of 18 pc tax was the most acceptable giventhe economic situation of the country, he said."In the name of people, ... standard rate should be capped at 18 per cent,"the Congress leader said, adding he does not buy the argument that by keeping the rate at 18 percent, the states will lose revenue.
"Let me go on record that it is hugely inflationary and will lead to a backlash if you jack up the Service Tax rate from the current 14.5 per cent to around 23 or 24 per cent," he said. Chidambaram said indirect taxes, being regressive in nature, are kept at minimum the world over and it ranges from 14.1 per cent in emerging economies like India to a maximum of 16.8 per cent in developed countries. The former Finance Minister said the rate of tax must be changed by the approval of Parliament and not by the Executive.
"When we say cap the taxe rate, we are saying that it cannot be changed by the whims of the Executive. A rate must only be changed by Parliament approval. It cannot and ought not be changed at the whims of the executive. People of Indiawant lower tax rate," he said.
Earlier Jaitley said the bill is guided by two main principles that rate of tax should gradually come down so that it is more citizen-friendly and also that tax should be adequate enough so as to generate enough revenue to states.
