People's Democracy

Oppose Finance Minister’s Proposals

The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement on August 7, 2012.

THE Polit Bureau of the CPI(M) strongly criticises the first statement made by the finance minister, P Chidambaram, after assuming office.  The measures announced are meant to help multinational companies in non-payment of tax on assets they acquire in India and to facilitate tax avoidance by foreign and Indian corporates.

The finance minister has made his intention clear to reverse the provision retrospective effect in the tax law.  This retrospective provision was in the Finance Bill which was adopted by parliament. No change can now be made without the parliament’s approval.

Reversing this measure means helping Vodafone to avoid paying a tax claim of Rs 12,000  crore on acquisitions in India.  Another step announced is to review the General Anti Avoidance Rules (GAAR) that was meant to plug the loopholes which enable tax avoidance by companies using the Mauritius route.

The finance minister has set out a neo-liberal package of measures which seeks to reverse the decisions taken by parliament and his own government.

It is obnoxious to argue that in order to regain `investor confidence’, tax laws should be so amended as to violate principles of natural justice in order to provide avenues for profit maximisation at the expense of public revenue.

The Polit Bureau demands that the government implement the retrospective provision in the law and work out effective rules under the GAAR.