Home Minister P Chidambaram pitched for higher taxes on luxury products

Concerned over low tax-GDP ratio, Home Minister P Chidambaram has pitched for higher taxes on luxury products and imposing inheritance tax.
Chidambaram, who is a former finance minister, had expressed these views at the full Planning Commission meeting headed by Prime Minister Manmohan Singh last month.

"We are really underestimating our capacity to raise resources, especially tax resources. Since non-plan expenditure is difficult to contain, the tax-GDP ratio must be raised especially by taxing conspicuous consumption and imposing inheritance tax," Chidambaram had said.

According to the minutes of the meeting held on April 21, the Home Minister had also underlined the need for streamlining the manufacturing sector to generate more jobs.

The Plan panel has proposed to raise the tax-GDP ratio from projected 7.7 per cent in the 11th Plan (2007-12) to 8 per cent in 12th Plan (2012-17). It also wants the ratio to be raised from estimated 7.2 per cent in 2011-12 to 8.8 per cent in 2016-17, terminal year of the 12th Plan.

Chidambaram also talked about improving the management of the public sector undertakings and made a case for providing security of tenure to managers and officials in energy and infrastructure PSUs and ministries.

During the meeting Planning Commission has proposed to raise average economic growth of 9 to 9.5 per cent during the 12th Plan period from a likely 8.2 per cent in the current five year plan