Personal wealth is no sin
There has been a debate of sorts on the eve of the Budget, over higher taxes for the upper crust of the rich. Taxes, while providing the funds to be allocated to the sectors of responsibility of a government, also address income disparities and, to a limited extent, the redistribution of wealth. Though non-tax revenue does contribute significantly to total GDP of quite a few nations, the tax/GDP ratios in low-income/middle-income countries fall between 15% and 19%, lower than the free market economies that yield more than 35%. In high-income countries, income taxes, primarily on individuals, comprise the largest proportion of tax revenue at nearly 36% with domestic taxes on goods and services and social-security contributions accounting for about 25%. Developing countries, yet to expand their sectors of individual wealth, depend lot more on domestic taxes on goods and services, direct taxes on corporates and on import duties. But the onset of globalisation having substantially lowered tariffs and duties, trade-dependent revenue has declined and stays uncompensated. India, with its increasing number of millionaires, is also facing declining trade-based revenues. Revenue wise, we are currently neither here nor there. With a great spurt in Indian entrepreneurship that is opening up huge innovations and attendant jobs opportunities, the timing is just not right for an increase in higher bracket personal taxation, though it might look inviting. We need to encourage individual wealth creation for the larger social and economic good of this nation.
Precisely why in the US, even the liberal Barack Obama is unable to push through his new tax proposals for the super-rich. For ongoing revenue augmentation, the government must look at areas like greater tax compliance, targeting tax evasion, limiting discretionary authority of income-tax offices, smarter computerised tax administration to arrest corruption and so on, with increased earnestness.
The country has just celebrated the 150th birth anniversary of the enlightened soul Swami Vivekananda. Swami Vivekananda had prescribed for humanity the principle of peaceful coexistence for making the world a better place to live in. He wanted humanity to spread the light around from within itself