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New Delhi, Mar. 3 (ANI): Revenue Secretary Sunil Mitra on Thursday said that the main aim of the budget proposals for 2011-12 was to broaden the tax base, moderate tax burden and ensure voluntary compliance.

Speaking at a CII interactive session with the Ministry of Finance on the Union Budget 2011-12, Mitra said excise duty was not hiked in order to further promote partnership with industry for overall economic growth.

He also addressed the issues raised by industry regarding increase in MAT. According to him, the hike will offset the reduction in corporate surcharge and the hike should not be seen as significant.

On CII’s recommendation of reducing Central Sales Tax to nil as it leads to double taxation, Mitra said that once the General Sales Tax comes in, the CST would be rolled back.

However, he added that if the CST is brought down to zero prior to the implementation of the GST, states would not agree to implement the GST.

The government’s Chief Economic Advisor, Dr Kaushik Basu, focused on inflation.

He highlighted that although inflation has come down in the last two weeks, it still remains higher than what he would be comfortable with.

He also pointed to the fact that inflation has become a major problem not only in India, but also for most emerging economies.

Dr. Basu commented that there is a trade-off between growth and inflation. With regards to food inflation, Dr. Basu talked about multiple taxation on the movement of goods, which has created supply side bottlenecks.

According to him, in the short run, the only way to reduce inflation is by monetary tightening. However, he said that such a step of increasing interest rates would cause undue pressure on the industry, which could result in unemployment and retardation of growth as manufacturing growth has seen a moderation in the last two months.

Dr Basu also commented on the fiscal targets for 2011-12, saying that it is achievable and not over ambitious. Total expenditure in 2011-12 is budgeted to be higher by a modest (3.4 percent) and this is because the extra income from the 3G auction will not be there this year.

Mr. Majumdar, Chairman, Central Board of Excise and Customs reiterated that excise duty was retained at 10 percent, the same rate as that on services, keeping in mind the intention to bring in GST on April 1, 2012.

He said this is a deliberate step to contain inflationary pressure and with the expectation that the extra profit that industry makes will be ploughed back which will foster further investment and economic growth.

The panel also included Joint Secretaries V K Garg, Ashutosh Dikshit and Sunil Gupta, who took questions from the audience on direct and indirect taxes. (ANI)