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IT stocks cool to Obama’s tax proposal

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IT stocks traded firm on the bourses on Wednesday morning despite US President Barack Obama's proposal for imposing a minimum tax on the offshore earnings of companies, in a bid to boost investment and hiring within the US.
IT stocks traded firm on the bourses on Wednesday morning despite US President Barack Obama's proposal for imposing a minimum tax on the offshore earnings of companies, in a bid to boost investment and hiring within the US.

The IT stocks led by HCL Technologies remained firm on the exchanges even after the US President Barack Obama on Tuesday called for putting in place a “minimum tax” on offshore earnings to boost domestic (US) investment and “prevent a race to the bottom in corporate tax rates.”

According to Nasscom, the industry body for IT and IT-enabled services companies, the sector is expected to grow 12-14 per cent and clock export revenues of $84-87 billion in the next fiscal. “An increase in global technology spending and opportunities created through adoption of disruptive technologies are expected to propel growth in FY '14.”

Exports from the industry, which counts the US and Europe as its biggest markets, were estimated to have grown 10.2 per cent to $75.8 billion in FY13, it added.

Obama, talking about tax policies, said companies moving jobs out of America should not get the benefit of tax cuts.

“Right now, companies get tax breaks for moving jobs and profits overseas. Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world. It makes no sense and everyone knows it,” Obama said .

He said moving jobs outside would not entitle companies to escape the tax regime.

"From now on, every multinational company should have to pay a basic minimum tax. And every penny should go towards lowering taxes for companies that choose to stay here and hire here,” he stressed.

Among the sectoral indices, the CNX IT index jumped 1.31 per cent, ahead of the auto and realty indices in the afternoon session.

The majority of the CNX-IT stocks were trading in the green. HCL Technologies, CMC and TCS were the top gainers among the IT stocks.

(This article was published on February 13, 2013)
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