Congress leader P. Chidambaram has cautioned the government on raising taxes as he said that when business is halted then this should not be done and instead the government should borrow to meet the deficit.
Former Finance Minister Chidambaram said "New or higher taxes are justified only when the economy is booming. Tax burdens on the middle class and poor is actually taxing distress."
The Congress leader said that the government should give money into the hands of the people.
"Governments should give money to the people in times of distress, not squeeze and take money from the people," tweeted Chidambaram.
Congress has been demanding cash transfers from the government to poor families.
"Instead governments are doing a Reverse Transfer of money from the people to the government! Cruel. New or higher taxes will impoverish families further," he said.
He suggested that governments must borrow to meet their deficits, not impose higher tax burdens when economic activity has ground to a halt.
The party has suggested that "One way of doing it is the direct transfer scheme something called NYAY which the UPA had proposed in its manifesto. Unless you create liquidity in the hands of the people it is not possible to fix the demand side."
While in interaction with Rahul Gandhi noted economist and Nobel laureate Abhijit Banerjee suggested a need for a stimulus package.
India now has the highest taxes on petrol and diesel in the world:
The steepest ever hike in excise duty by Rs 13 per litre on diesel and Rs 10 per litre on petrol on Tuesday has catapulted India as the country with the highest taxes on fuel.
The government on Monday night issued a notification to increase road cess on petrol and diesel by Rs 8 per litre. Further, additional excise duty was also hiked by Rs 2 per litre on petrol and Rs 5 per litre in diesel. This was the steepest ever hike in duties on fuel in India and came on the same day as the state government in Delhi hiked value-added tax which goes to its own kitty by Rs 7.1 per litre on diesel and Rs 1.6 per litre on petrol.
With these hikes, every litre of petrol in Delhi that currently retails at Rs 71.26 includes taxes of Rs 49.42 while for every litre of diesel at Rs 69.39 it is Rs 48.09. Taxes now comprise over 69 percent of the pump price of the two fuels, which is the highest in any part of the world.
Taxes on alcohol:
According to the Reserve Bank of India's 'State Finances: A Study of Budgets of 2019-20' report published in September 2019, the levies on alcohol make-up on an average 10 to 15 per cent of States' Own Tax Revenue (SOTR) for the majority of states.
The opening of liquor shops after a 40-day gap brought cheer for states starved of funds amid the ongoing coronavirus lockdown. Seeing large crowds at shops, it became clear why liquor sales are crucial for states to boost their revenues. The serpentine queues of the tipplers on Monday also opened an opportunity for the states to increase prices and earn additional revenue. While the Delhi government announced a 70 per cent increase (special corona fee) across categories, Andhra Pradesh ordered two successive hikes. The southern state cleared 50 per cent hike in maximum retail price (MRP) on Monday after a 25 per cent increase on Sunday. Even Punjab, one of the highest per capita consumers of liquor in India, is mulling a hike, sources said. The state is actively considering a 'special corona charge' on liquor for a specified period to rake in more revenue.