A day ahead of their meeting with Finance Minister P Chidambaram, the Left parties have demanded an end to all corporate tax exemptions and asked for imposition of new taxes on corporates. They want the capital gains tax re-imposed as well.
The Left has also sought regulation of foreign exchange outflows through imposition of an ad valorem tax and a review of export incentives in the wake of the comfortable foreign exchange position.
In another demand that will hobble the functioning of foreign companies in India, the Left parties have demanded that no foreign entity be allowed to hold rupee-denominated sovereign debt directly or indirectly.
The Left has spelt out its sectoral wishlist in a draft note that is likely to undergo only marginal modifications and will be submitted to Chidambaram on Tuesday when the parties meet him for pre-Budget consultations.
They have also said that the salaried class be not subjected to any additional income tax burden.
The Left parties want public expenditure in agriculture, health and education increased by Rs 14,000 crore. "In sum, there should be an increase of Rs 50,000 crore in the central Plan outlay in the Budget to meet the commitments made in the common minimum programme" the note says.
It also says there is a strong case to increase the tax-GDP ratio by around 1.5 per cent. The Left notes that the gross tax revenue collection stood at 9.21 per cent of the GDP which "is quite low even when compared with that of other developing countries".
This will mop up an additional Rs 30,000 crore (Rs 300 billion) needed to meet part of the expenditure on the implementation of the CMP (Rs 50,000 crore), Left leaders said.
The Left is the only party to have demanded a reduction in defence outlays "which were a whopping Rs 12,000 crore (Rs 120 billion) in the interim Budget".
The Left parties have, predictably, attacked the government for setting up a fund for disinvestment proceeds announced a few days ago, describing the move as one that is "lacking economic rationale".
"Selling stakes in profit-making PSUs is effectively running a Budget deficit. While in the latter case, interest payments have to be made by the government in the future against one-time borrowing, in the former, future streams of income from dividends are forgone against a one-time receipt from the sale of stakes," the note says.
The parties have asked for an "agri-risk fund" that will mitigate the risk of lending by banks to the agriculture sector. They have also demanded a system of variable tariffs to protect the prices of commodities that are subject to price fluctuations, like cotton and groundnut.
The parties want the government to revise the structure of Customs duties on finished and intermediate goods, and excise duties in some sectors "that result in discrimination against the domestic industry".
They have sought the implementation of the recommendations of the standing committee on petroleum that has suggested measures to restructure Customs and excise duties on the product.
Besides, the parties have counselled against making the power sector a zero duty segment.
