Finance Minister of the Year, South Asia
Arun Jaitley, India
Successful policy combines tax cutting with simplified tax filing
India’s finance minister Arun Jaitley won this award last year with an eye-catching policy move that revolutionised tax collection in the country. This year he impressed GlobalMarkets with a quieter, more detail-oriented approach.
When the finance ministry launched the goods and services tax (GST) in July 2017, he replaced a confusing system that caused headaches for local businesses and scuppered trading between different states. This year Jaitley has built on that signature policy move.
The government has continued to cut consumption taxes, unveiling reductions on washing machines, shoes and a variety of other goods in July. That was a blow to revenue collection in the country but it was at least partly compensated for by impressive economic growth and tax reforms elsewhere.
For one thing the finance ministry has made tax filing easier for small businesses, addressing one of the major hurdles in India’s economy — all that red tape. Jaitley and his team have now simplified tax filing for small businesses with revenue of less than Rp50m ($686.5k), more than 90% of the registered tax base.
TAX COLLECTION GAINS
This should ensure that much of the revenue lost from lower taxes will be offset by improved collection, an attractive trade-off for all concerned. India has budgeted gross tax revenue growth of 16.7% for the fiscal year ending March 31, 2019, according to Moody’s.
India’s economy is on a tear, growing by 8.25% in the first quarter of fiscal 2018, according to the Asian Development Bank. This has helped push up
inflation causing a headache for Urjit Patel, GlobalMarkets’ central bank governor of the year in South Asia. But it has also put the lie to fears that the government was being reckless with the launch of the consumption tax, let alone its demonetization policy.
Jaitley’s landmark policy moves may be behind him but over the last year he has shown a careful approach that will steer India well in the years to come.