The stimulus package, including a cut in corporate taxes, announced by the Centre is the biggest deceit in the history of the country, Finance Minister T.M. Thomas Isaac has said.
Addressing a press conference here on Sunday, Dr. Isaac termed the Centre’s move a PR exercise ahead of Prime Minister Narendra Modi’s ‘Howdy Modi’ programme in Houston, USA.
He said the Centre’s announcement of a reduction in corporate tax from 30% to 22% giving away ₹1.45 lakh crore was misleading.
“A press statement issued by the Press Information Bureau (PIB) after the Union Finance Minister announced the stimulus package says that the rate of 22% is subject to the condition that they will not avail any exemption/incentive. In 2016, the then Finance Minister Arun Jaitely in his budget speech said that the effective rate of tax by companies comes to an average of 24.67% because of various exemptions which they are availing of. So actual reduction is only 2.67% and not 8% as claimed. In fact, the PIB statement notes that the effective tax rate for these companies shall be 25.17% inclusive of surcharge and cess,” Dr. Isaac said.
Dr. Isaac said the corporate tax was part of the divisible pool. “The actual stimulus package will come to around ₹29,000 crore only. The Centre has fooled the public, including the corporates,” he said.
He said the corporate appeasement was at the expense of States fiscal space. “The Centre will recoup its losses from one source or the other. But for States, it is a loss for good,” the Minister said.
Dr. Isaac said the additional allocation to MGNREGS and liberal credit with interest subvention for auto sector and durables would have been a better stimulus than corporate tax concessions.
On the alleged corruption in the Kerala Infrastructure Investment Fund Board (KIIFB), the Minister said that all the transactions under the KIIFB were transparent. He said the government was ready to answer all the questions raised by the Leader of the Opposition Ramesh Chennithala regarding the KIIFB.