Tax hike on ‘very rich’ is worth a look, says FM
there is an argument, that when the economy requires, when the government requires more resources... the very rich should willingly pay a little more.” So, what the minister indicates is the argument for a transient regime of differential taxation for the extremely rich, given the economic slowdown and consequent decline in revenue growth.
Chidambaram's comments come against the backdrop of a global debate, from the US to France, about whether the very rich pay enough taxes and a group of economists suggesting slightly higher taxes for the “super-rich” in India in a pre-budget interaction with the finance minister on January 7. There is, however, an equally strong view that higher tax rates would reduce compliance and might not yield any net gain for the government. All industry chambers have vehemently denounced the proposal to increase tax on the super-rich while there have also been some voices from corporate India in favour of the proposal like that of Wipro founder Azim Premji.
Private listed companies had paid dividends close to Rs 60,000 crore to promoter groups in 2011-12. If a proposal to tax dividends in the hands of (very rich) recipients is implemented (currently there is a dividend distribution tax of 15% which the firms deduct), this could be one chunk that could be brought under the new impost.
India taxes personal income under three slabs – 10%, 20% and 30% – and education surcharges on these rates that make them slightly higher.
Chidambaram believes the the burden of fiscal correction
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