Could a clutch of finance-ministry bureaucrats derail Prime Minister Narendra Modi’s grand plan to remake India’s economy? Recent damage to the government’s reputation—among both investors and ordinary citizens—suggests tax officials are on a collision course with the politicians they ostensibly serve. Unless resolved, the lack of clarity in the government’s approach to taxation risks undoing good work in other areas of the economy.
Speak with businessmen and reform-minded officials in India and a consistent concern will emerge: Tax authorities have brought a wrecking ball to Mr. Modi’s economic party.
In March, the tax department used India’s notorious retroactive tax law to demand $3.3 billion from Cairn India, a subsidiary of Britain’s Vedanta Resources, for transactions dating back to 2007. At around the same time, foreign institutional investors began receiving notices to cough up a so-called Minimum Alternate Tax, which historically had only applied to domestic companies. Finance Minister Arun Jaitley declared that the demands could help the government raise $6.4 billion, before backing off amid signs of a stampede away from the stock market.
The full text of this article is available with a subscription to The Wall Street Journal. It will be posted to AEI.org on Monday, May 11, 2015.
from AEI » Latest Content http://ift.tt/1FRTS39
0 التعليقات:
Post a Comment