Budget 2007: Poupulist than Progressive

28 Feb

At a first look, the Budget 2007 doesn’t look positive at all. The budget seems to encourage more black money than distribution of wealth in a legitimate way. For example, take a look at Fringe Benefit Tax on ESOPs. Or tax rate hike on dividends. These things take a toll on long term commitments to employers and markets. In turn, employers and companies may look towards using these monies in other ways that give more benefit and less taxation.

When we are targeting a GDP growth of 10%, increasing the income tax exemption limits by Rs10,000.00 is not a great benefit at all.

Increasing education cess to 3% is going to take a toll on high income groups.

Just to show more allocations for certain sectors, the tax payer is tolled a lot, both directly and indirectly. This is not good.