Column : Let the rich pay a little more

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MK VENU: Jan 16 2013, 00:26 IST

Tags: P Chidambaram | GDP Growth | MK Venu Column

The government has caused some anxiety among the middle class by suggesting the forthcoming Budget could tax the rich. The anxiety occurs because in India it is difficult to define the rich, in relative terms. Even someone earning R15 lakh to R20 lakh a year can be described as rich relative to the 500-million-plus earning less than $2 a day. Generally speaking, individuals earning about Rs 1.5 lakh a month see themselves as very middle class. I have heard them complain about LPG subsidies being withdrawn. Though it is entirely legitimate to ask this income category to make some sacrifices to provide extra welfare to the 500 million living under $2 a day, their stock response often is: “The government is wasting so much social welfare funds it already has, so why should we sacrifice more?” Remember, this is also the class which has on numerous occasions protested at Delhi’s India Gate over a whole range of issues since 2011.

Young, middle class urban Indians are also voting very aggressively as seen in successive assembly polls.

So, finance minister P Chidambaram is bound to be mindful of who he defines as rich in case he chooses to put a legitimate surcharge of 10% (additional tax of 3%) on a certain higher income category. A surcharge, by definition, is meant to be a temporary levy. The finance minister would not want to tinker with the three basic tax rates of 10%, 20% and 30% whose sheer simplicity was authored by him in 1997.

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ashok sharma | 18-Jan-2013Reply | Forward

The taxed money should be spent only for public cause as it is collected from public. If taxed money is deposited in the personal accounts of corrupt politicians & officials or spent for their lavish life style then there is no end to generate fiscal deficits & again more taxation on the public. Corruption is the main source for inflation, more taxation & national fiscal deficit.

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V.V. Seshagiri | 16-Jan-2013Reply | Forward

I think its a great idea to get the super rich to pay their fair share of taxes, sure they will let out a scream like the billionaires on Wall Street but they'll get over it. Even better would be for the Government to close all the loopholes in the tax system that the super rich use to make more money. But this sentence takes the cake, "Of the roughly 33 million tax return filers, only 1.4 million show earnings of over R10 lakh a year." Holy cow! Is this the best India can do? Of the 1 Billion plus population the country is only able to form a tax base of 33 Million people? There's your problem right there - its an embarrassment. Yes, we know that there are millions of very poor people but the country should be able to triple or quadruple the tax base without breaking a sweat, something is very wrong about the system. The system is not just broken, its on life support.

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venkataramanaiah ramu | 16-Jan-2013Reply | Forward

The super rich class should'nt mind paying an insignificant amount n the form of additionnal tax and this brings them under the category of 'super rich' in the society and that itself is something of a sort of distinction for them. Their point that the govt has sufficient scope of managing expenditure from other sources is also a credible one. In addition the govt could take into account the CSR contributions also into regular budget as an additional source.