ADB: tax sops for SEZs unnecessary

Special Correspondent

NEW DELHI: The Asian Development Bank (ADB) on Tuesday joined ranks with
the critics of Special Economic Zones (SEZs), saying that the tax
incentives being offered by the Government to such developers and the
units in these zones were "unnecessary".

Noting that such tax breaks were "unnecessary," the bank's report,
"Asian Development Outlook 2007," said: "SEZ tax inducements are
expensive, and come at a time when the Government is struggling to
provide adequate infrastructure in the wider economy".

According to estimates by the National Institute of Public Finance and
Policy (NIPFP), the Government is expected to lose about Rs. 1,00,000
crore in revenue on account of fiscal concessions to SEZs.

The ADB report pointed out that the special tax incentives would open
loopholes for tax evasion and undermine investments in firms located
outside such zones, as these units would suffer from "worse
infrastructure and higher taxes."

Instead, better infrastructure and more bureaucratic efficiency in SEZs
would be sufficient to stimulate investment, the report said.

http://www.hindu.com/2007/03/28/stories/2007032819961800.htm