Wealthy Farmers Should Be Taxed, Says Yechury

The CPI(M) has suggested that Union finance minister P Chidambram should not allow rich urban-based owners of farmhouses to evade taxes by calling themselves farmers. His party wants the wealthiest 20 per cent of farmers to be made to pay taxes.

The party is likely to present concrete proposals on alternate resource mobilisation to Prime Minister HD Deve Gowda and Chidambaram at the next meeting of the United Front's steering committee, scheduled to take place this week.CPI(M) politbureau member Sitaram Yechury, who is a member of the steering committee, told Business Standard that instead of focussing on bridging the budgetary deficit itself, the government should concentrate on plugging the loopholes through which potential revenue is lost.

Yechury's suggestions include taxing rich farmers, netting black money, formulating stringent laws to stop the flight of foreign exchange, speedy recovery of outstanding bank loans, currently running to Rs 40,000 crore, taxing luxury cars, and stringent enforcement of the minimum alternate tax.

Yechury and Left leaders like CPI general secretary AB Bardhan say that farmhouses have become a way to hide black money, since the agricultural sector is outside the tax net. Crores of rupees are spent on building farmhouses, says Yechury, and not a single paisa is paid either as property or wealth tax.

He says that stringent laws should be formulated to stop the flight of foreign exchange. According to an unofficial estimate of a US-based think tank, $100 billion of foreign exchange has been diverted from the country, as much as $11 billion of it in 1994-95 alone.

While the finance minister talks of attracting foreign investment to the tune of $10 billion, the nation is losing larger amount of foreign exchange every year, he says, referring to that report. Yechury favours the intention to increase the base of direct taxes and shift away from the current reliance on indirect taxes, since these are potentially inflationary.

He suggests a revamp of the minimum alternate tax, so that no profit-making companies can evade taxes. He says he would like the budget to be growth-oriented, with special emphasis on two areas: the government must undertake steps to develop infrastructure, and it should not abdicate its responsibility to provide social services. Experience has shown that the private sector has never shown interest in infrastructure development and the task has been left to the government, Yechury says, adding that the budget should have concrete proposals in this regard, as no investors will be interested to invest without proper infrastructure facility.