Slow tax reforms to blame for fiscal consolidation drive: Bibek Debroy

Chairman of the Economic Advisory Council to prime minister (EAC-PM) Bibek Debroy on Thursday said the government is looking to reform tax structures such that there is no deviation from fiscal consolidation. 

He said while on the indirect tax side there is GST, which is a work in progress, a task force has been set up to look into direct tax structure. 

"The trouble with reforming taxes is the obvious one -- everyone argues remove exemptions for other people but retain them for me. That's why the tax reform agenda does not get much traction," Debroy said at a Shared Value Summit, jointly organised by Institute of Competitiveness (IFC) and NITI Aayog.

"This is broadly what this government has been trying to do while ensuring that there is no deviation from the path of fiscal consolidation."

He said a simplified tax regime with reduced compliance cost requires standardisation, harmonisation and elimination of tax exemptions. 

India's tax-GDP ratio today is 17 per cent of GDP, and about 5-5.5 per cent of GDP is lost because of tax exemptions, Debroy said.

"If the tax exemptions have not been there, the tax-GDP ratio would have been at 22-22.5 per cent," he remarked.

He said one of the serious problems the country is facing is availability of updated economic data. The last robust data set that the country has is still 2011-12.

"We have less of a data problem when we are talking about all-India macro-level data. We have a more serious data problem when we try to go sub-national, looking at state-level data," he said.