ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

POLITICS-Search for Allies

questionable. In the first place, it is by no means established that zero-tax companies register faster growth. In the case of Reliance Industries, for instance, the ratio of value of production to gross fixed assets was 0.66 against 1.18 for the 520 companies in the IDBI portfolio, in 1994-95 when the company's profits alter (and before!) tax shot up by 85 per cent from Rs 576 crore to Rs 1,065 crore, the ratio came down from 0.83 in 1993-94 to 0.66. The corresponding ratio for TISCO was 0.54 in 1993-94 and 0.60 in 1994-95. It is arguable that because of the tax-free resources that they command, zero-tax companies tend to be more capital- intensive and so the government is unlikely to realise additional excise duties from increases in output by them commensurate with the corporate tax revenue forgone. Secondly, if these companies are shown to be more capital-intensive, the contention thai they would employ more people also becomes disputable. Indirect evidence of this is to be seen in the persistent decline of the wage share in value added in the private corporate sector. For the IDBI sample of 520 companies, wage share dropped from 34 per Finally, the incidence of indirect taxes such

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Back to Top