Tax The Rich To Bridge Oil Pool Deficit: Cpm

The CPI(M) has proposed cutting back the excise and customs duties on petroleum and its products in order to neutralise the oil pool deficit. The party has proposed taxing the rich instead, perhaps by reimposing the surcharge on corporate tax.

At Sundays steering committee meeting, CPI(M) politburo member Sitaram Yechury suggested cutting these taxes to counter finance minister P Chidambarams pleas for increasing the prices of petroleum products to bridge the deficit, which was Rs 15,500 crore on March 31.

He pointed out that, according to the 1997-98 budget estimates, the customs and excise collections from petroleum and petroleum products were estimated at Rs 19,675.2 crore, which was Rs 4,000 crore more than the oil pool deficit had been on March 31. He added that if the oil pool deficit was rising despite the decrease in international prices, it had to be because of taxes.

Yechury distributed a paper to those at the meeting, which argued that instead of giving concessions to the rich in the budget of nearly Rs 20,000 crore, these duties on oil and petro-products could have been avoided. Chidambaram resisted this arguement, saying that was the wrong way to go about it but, according to one Left leader who was at the meeting, Prime Minister IK Gujral asked him why it was wrong. Gujral promised that the government would bring a set of alternatives to the next meeting, perhaps around June 10.

The Left leader held that petroleum minister TR Balu supported the Left viewpoint and that industry minister Murasoli Maran, also from the DMK, observed that the meeting comprised politicians who had to go back to the people.

Chidambaram began by pointing out that the huge subsidies were unsustainable, particularly since large parts were siphoned off and did not reach the poor, for whom they were meant. Bihar Chief Minister Laloo Prasad promptly said these should be stopped and the money given to us to distribute to the poor.

Many of those present laughed and Yechury muttered something about Laloo Prasad having made money from the animal fodder scam and now wanting this money too.

Later, Yechury asked Chidambaram why the deficit could not be bridged by cutting taxes instead of by raising prices. He held that the burden for cutting the fiscal deficit was being pushed on to the poor.

His paper also pointed out that the finance ministry had reduced the surplus in the oil pool account from Rs 8,900 crore on March 31, 1989, to March 31, 1993 by using the money to bridge its overall deficit. If that money was returned along with interest, the deficit would be bridged, he argued.

The paper also argued that increasing the price of natural gas by Rs 1,000 would yeild an increased revenue of Rs 2,000 crore. He suggested a dual pricing system for the non-core, non-priority sectors, which could bring in Rs 5,000 crore annually.

The paper further argued that the cumulative cess amounted to Rs 28,900 crore on March 31, 1997, of which only Rs 902 crore had been transferred to the oil industry. If the entire amount was transferred, there would be adequate funds for developing the domestic industry, he argued.