10. 7 Suggestions for Necessary Reforms in Fiscal Policy

10. 7  Suggestions for Necessary Reforms in Fiscal Policy:

(i) Progressive Taxes:

The tax structure of the country should try to infuse more progressive elements so that it can put heavy burden on the rich and less burden on the poor. Necessary amendments should be made in respect of irrigation tax, sales tax, excise duty, land revenue, property taxes etc.

(ii) Agricultural Taxation:

The tax net of the country should be extended to the agricultural sector for rapping a huge amount of revenue from the rich agriculturists.

(iii) Broad-based Tax Net:

Tax net of the country should be broad-based so that it can cover increasing number of population having the taxable capacity.

(iv) Checking Tax Evasion:

Adequate measures be taken to check the problem of tax evasion in the country. Tax laws should be made stricter for prosecuting the tax evaders. Tax machinery should be made more efficient and honest to gear up its operations. Tax rate should be reduced to encourage the growing trend of tax compliance.

(v) Increasing Reliance on Direct Taxes:

Tax machinery of the country should attach much more reliance on direct taxes instead of indirect taxes. Accordingly, the tax machinery should try to introduce wealth tax, estate duty, gift tax, expenditure tax etc.

(vi) Simplified Tax Structure:

Tax structure and rules of the country should be simplified so that it can encourage tax compliance among the people and it can remove the unnecessary harassment of the tax payers.

(vii) Reduction of Non-Development Expenditure:

The fiscal policy of the country should try to reduce the non-developmental expenditure of the country. This would reduce the volume of unproductive expenditure and can reduce the inflationary impact of such expenditure.

(viii) Checking Black Money:

The fiscal policy of the country should try to check the problem of black money. In this direction schemes like VDIS should be repeated. Tax rates should be reduced. Corruption and political interference should be abolished. Smuggling and other nefarious activities should be checked.

(ix) Raising the Profitability of PSUs:

The Government should try to restructure its policy on public sector enterprises so that its efficiency and rate of return on capital invested can be raised effectively. PSUs should be managed in rational manner with least government interference and on commercial lines. Accordingly, the policy of budgetary provisions for maintaining the PSUs should gradually be eliminated.