Latest news with #consumptiontax
Reuters
a day ago
- Automotive
- Reuters
India's tax restructuring a 'huge reform', will boost competitiveness, Maruti Suzuki chair says
Aug 18 (Reuters) - India's proposal to rationalise goods and services tax is a "huge reform", which is bound to have good outcomes, RC Bhargava, chairman of the country's top carmaker Maruti Suzuki ( opens new tab, told Reuters on Monday. The restructuring will increase competitiveness of Indian products and the opening of trade borders will bring in the necessary competition, which will help expand the market and benefit customers, he said. India's federal government has suggested lowering the goods and services tax on small cars to 18% from 28%, as part of its sweeping consumption tax cuts, Reuters reported on Monday, citing a government source.
Japan Times
a day ago
- Business
- Japan Times
Modi bolsters India's economy with tax cuts ahead of U.S. tariffs
India expects consumption tax cuts announced by Prime Minister Narendra Modi will give a boost to the economy without hurting the government's fiscal deficit, helping to offset the fallout from higher U.S. tariffs. Officials in New Delhi said on the weekend the proposed changes to the goods and services tax — which will see the number of tax categories reduced to two from four — would benefit a broad range of sectors, including consumers and small businesses. The adjustments would have a limited effect on government revenue, officials told reporters, requesting anonymity in order to discuss the plans. IDFC First Bank Ltd. estimates the lower consumption taxes will help boost nominal growth by 0.6 percentage points, while the impact on inflation is expected to be a reduction of 0.6-0.8 percentage points, spread over 12 months. Emkay Global Financial Services Ltd. forecasts a drop in government revenue of about 0.4% of gross domestic product, with states expected to bear a disproportionately bigger burden of the slump. "Simplifying the GST structure is a welcome reform toward boosting domestic consumption, especially as India's tax incidence has been increasing,' Madhavi Arora, an economist at Emkay, said in a note. Even though changes to the GST had been discussed for years, the timing of the announcement in Modi's Independence Day speech was a surprise to many. The move comes against the backdrop of President Donald Trump's threat to double tariffs on Indian exports to the U.S. to 50% by Aug. 27 to penalize the country for buying oil from Russia. Pedestrians and shoppers in a crowded market near Zaveri Bazaar during the festival of Dhanteras in Mumbai, India, on Oct. 29, 2024 | Bloomberg Modi said Friday the economy needs to be more self-reliant, especially in critical sectors like energy, minerals and defense. His tax announcement came a day after S&P Global Ratings raised India's sovereign rating to BBB, the country's first upgrade in 18 years. S&P said Trump's tariffs would have a "manageable' impact on India's consumption-driven economy. Spending by consumers and businesses contributes more than 60% to India's GDP. After Trump announced he was hitting India with 50% tariffs analysts, including from Citigroup Inc., estimated a 0.6-0.8 percentage point downside risk to India's annual growth. The GST cut could help cushion the impact. "The uptick in consumption may help to negate the impact of a no-deal scenario between the U.S. and India,' said Garima Kapoor, an economist at Elara Capital. S&P's upgrade may also enhance India's appeal as an investment destination at a time when growth is slowing, she said. India has a complicated GST tax structure, with four main categories of rates, at 5%, 12%, 18% and 28%. The proposed changes will see the number of categories reduced to two, with most goods that were taxed at 12% and 28% now taxed at the lower rate of 5% and 18%, respectively. About two-thirds of government revenue from GST comes from the 18% tax category, which would limit any hit to fiscal coffers as a result of the adjustments, officials told reporters. Any loss in revenue is likely to also be offset by a likely jump in spending on basic goods like food that will be taxed at a lower rate, officials said. The proposals will be discussed by a panel of state finance ministers, and then submitted to the GST Council, which is headed by Finance Minister Nirmala Sitharaman, in September or October, officials said. The GST Council has the final say on any changes in tax rates. The changes will be implemented in the current financial year, the officials said.
Reuters
4 days ago
- Business
- Reuters
India plans sweeping consumption tax cuts by October to boost economy
NEW DELHI, Aug 15 (Reuters) - India's government will slash the consumption tax it charges consumers and businesses by October, a top official said on Friday, hours after Prime Minister Narendra Modi announced sweeping tax reforms to boost the economy in the face of a trade conflict with Washington. The federal government will propose a two-rate structure of 5% and 18%, doing away with the 12% and 28% tax that was imposed on some items, said the government official, who declined to be named as the plans are still private. The plan is to bring "99%" of all the items that are in 12% category to 5%, the official said. That tax slab includes butter, fruit juices, and dry fruits, and any cuts to the basket could benefit the likes of Nestle (NESN.S), opens new tab to Hindustan Unilever ( opens new tab to Procter & Gamble (PG.N), opens new tab. The tax cut plan comes amid growing tensions between New Delhi and Washington on steep U.S. tariffs on Indian goods. Modi on Friday made a public appeal to promote domestic products, and his supporters have been calling for boycott of American products. Addressing the nation on its 79th independence day, Modi earlier said that the goods and services tax would be reformed and taxes lowered by Diwali, the Hindu festival of lights, set to be celebrated in October this year. "This Diwali, I am going to make it a double Diwali for you. Over the past eight years, we have undertaken a major reform in goods and services tax. We are bringing next-generation GST reforms that will reduce the tax burden across the country," Modi said. The final decision will be taken by the GST (goods and services taxes) Council, which is chaired by the finance minister and has all the state's finance ministers as members, the official said. The council is set to meet by October. Citi estimates that about 20% of items - including packaged food and beverages, apparel and hotel accommodation - fall under the 12% GST slab, accounting for 5-10% of consumption and 5-6% of GST revenue. If most of these are moved to the 5% slab and some to the 18% slab, it could lead to a revenue loss of around 500 billion rupees, or 0.15% of GDP, potentially taking the total policy stimulus for households in the current 2025-26 financial year to 0.6%-0.7% of GDP, the brokerage said.
NHK
02-07-2025
- Business
- NHK
Japan posts record high tax revenue in fiscal 2024 for fifth straight year
Japan's tax revenue for fiscal 2024 reached a record high for the fifth consecutive year. The increase is attributed to higher corporate and consumption tax revenues. The Finance Ministry announced on Wednesday that the general account tax revenue in the year through March reached 75.232 trillion yen, or about 523 billion dollars. The figure is up about 3 trillion yen from the previous fiscal year. Corporate tax revenue grew more than 2 trillion yen to around 17.9 trillion yen on the back of strong earnings results. Consumption tax revenue increased more than 1.9 trillion yen to about 25.2 trillion yen, reflecting steady domestic consumption and inflation. Income tax revenue, on the other hand, dropped about 800 billion yen to roughly 21.2 trillion yen due to tax cuts. The fiscal 2024 tax revenue is about 1.8 trillion yen more than the ministry's projection at the end of last year. If the trend continues, tax revenue for this fiscal year could be higher than projections. The issue could be a topic of debate among parties during the campaigning in the upcoming Upper House election.
ABC News
26-06-2025
- Business
- ABC News
Jim Chalmers will have to juggle competing demands to secure tax reform
Next week will be the 40th anniversary of the Hawke government's tax summit. Dominated by then treasurer Paul Keating's unsuccessful bid to win support for a consumption tax, it was the public centrepiece of an extraordinary political and policy story. That story was about the possibilities for, but constraints on, bold reform; how a determined treasurer can muster a formidable department to push for change, and the way the ambitions of a minister can clash with the pragmatism of a prime minister. Ken Henry, later secretary of the treasury, was then part of what they dubbed the "treasury tax reform bunker". He kept a timesheet, averaging 100 hours work a week for a three-month period. Officials brought sleeping bags and their small children (Henry's were aged three and five) into the office. Before the summit, the government produced a comprehensive draft white paper. Keating battled to keep the conflicting interests "in the cart" for his blueprint. But the four-day summit, attended by business, unions, premiers and community groups, was inevitably divided by stakeholders' self-interests. In particular, the unions couldn't wear Keating's consumption tax, and Bob Hawke kiboshed it unceremoniously. Keating, who had to settle for a more limited but still very significant set of reforms, was furious with Hawke, and it left a fracture in their relationship. Jim Chalmers was aged seven in 1985. But he's a student of Keating (he did his PhD on his prime ministership) and you can be sure he's boned up on what went right and wrong in that tax reform exercise. Now he is preparing for the government's August 19-21 "roundtable" and his own bid at major tax reform. The roundtable, as first announced, focused on "productivity", and that will be central. But Chalmers has taken to calling it an "economic reform" roundtable — its brief also includes budget sustainability and resilience — and he is effectively putting tax reform close to its heart, or at least letting others do so. After all, a fit-for-purpose tax system is one key to improving productivity. The roundtable (for which invitations to business and the union movement are now going out, with more to follow) is nothing like on the scale, in size (the summit had about 160 attendees, the roundtable will have about 25) or preparation, of the elaborate 1985 conference. And crucially, while that summit was the culmination of a process, Chalmers is using the roundtable to kick off a process. Chalmers is lowering expectations in regard to specific outcomes on tax from the roundtable. While those might be obtainable on some productivity issues, on tax he is likely to look for broad support for a direction of reform. For instance, is there a general appetite for reshaping the tax system towards lower personal and company tax, offset by higher taxes on certain investments and savings? ` Most tax experts argue Australia's system is too skewed towards taxing income rather than spending. This leads to calls to increase or broaden the GST, financing cuts to personal income tax. Chalmers has been a long-term opponent of changing the GST, but he says he is not ruling the GST out for discussion at the roundtable. (That's a contrast to when Prime Minister Kevin Rudd, commissioning Henry to lead a major tax review, excluded the GST from its terms of reference.) Almost certainly, however, it would not be possible to get "consensus" from business and unions for GST changes. Not least of the constraints is that compensating the losers in such a change is very expensive and there is not the money to do so these days. That immediately limits the extent of reform. Henry tells The Conversation's podcast that if he were designing a tax reform package "I'd be looking at opportunities to broaden the GST and maybe to increase the rate as well". But "I do think it is possible to achieve major tax reform […] without necessarily increasing the [GST] rate or extending the base". Henry's (non-GST) wish list includes getting rid of the remaining state transaction taxes, such as stamp duty on property conveyancing. Notably, he argues for extracting more revenue from taxing natural resources and land, and also from taxing pollution from various sources. "We're going to need to tax those things more heavily if we're going to relieve the tax burden on young workers through lower personal income tax and introducing tax indexation." Henry is particularly focused on the unfair burden at present put on these younger taxpayers. He has come around to the idea of income tax indexation as one means of assisting them. A system more geared to younger workers raises immediate questions about the present generous treatment of superannuants. Chalmers is already caught in that hornets' nest with his proposed changes for those with balances more than $3 million. To what extent will the roundtable tax debate revive the issues of negative gearing and the capital gains tax discount? The government hosed down before the election the prospect of any changes to negative gearing this term. Chalmers, however, had work done on this last term and he would likely favour reining it in. But would this be a bridge too far for the prime minister? Indeed, where will Anthony Albanese's limits be when it comes to reform? Would he only support changes that had strong consensus? And how far would he feel constrained in going beyond what he considers he has a mandate for? If Chalmers stays serious about the tax push, it is going to take many months of intense work. It can't be rushed, but nor can it be delayed. If it ran for much over a year it would likely find the government's political capital had been eroded. The size of its capital store can appear deceptive because so much of it is thanks to Peter Dutton and Donald Trump. In 2022, the Liberals boycotted Labor's jobs and skills summit (although Nationals leader David Littlepround attended). This time, shadow treasurer Ted O'Brien has accepted Chalmers' invitation and will participate in the roundtable. It will be a tricky gig for O'Brien, new to this shadow portfolio. He has to avoid being too negative, but nor can he endorse things the opposition might later reject. The Coalition will not have a tax policy against which to judge what's said. The occasion will be a chance for O'Brien to make contacts and get more insight into stakeholders' views on the key economic debates, much wider than just tax. Importantly, however, O'Brien will need to remember judgements will be being made about him by other participants in the room. Business in particular will be seeking to get a fix on whether opposition leader Sussan Ley's declarations about wanting to be constructive where possible are fair dinkum. Michelle Grattan is a professorial fellow at the University of Canberra and chief political correspondent at The Conversation, where this article first appeared.
