NEW DELHI: Former chief economic adviser Arvind Subramanian said he was against reducing personal income tax rates, as it would benefit a small percentage of taxpayers, and raising of GST rates. He stressed that there was no space for expansionary fiscal policy.

“(There is) no space to have expansionary fiscal policy. There is a lot of talk about personal income tax cut and raising GST rates, and I would be categorically against the both, we do not have the space,” he said at an event on Friday.

“I think personal income tax cuts motivated by desired increased consumption is highly inequitable,” Subramanian said, adding that the personal income tax will benefit only the top 5-7 % (of the population), who are the actual tax payers. “So, if you want to boost consumption, it has to be something much more, which actually reaches much poorer people. It has to be some kind of DBT (direct benefit transfer) or universal basic income (UBI).”

The former CEA said any increase in GST rates will affect consumption and a slowdown or recession is not the time to embark on (such options). “You can't have too much expansionary fiscal policy but equally, you can't be crunching government demand at a time when the economy is weak and in stress,” he said.

Published On : 21-12-2019

Source : Economic Times