Report suggests wealth tax on billionaires, GST review | The Financial Express

Report suggests wealth tax on billionaires, GST review

Top 10% own 72% of wealth in India: Oxfam

Report suggests wealth tax on billionaires, GST review
The report has suggested taxing the wealth of the richest 1% on a permanent basis, with higher rates for millionaires, multi-millionaires and billionaires. (IE)

Highlighting that the gap between the rich and the poor is widening after the Covid-19 pandemic, a new report has made the case for imposing a wealth tax on the richest and has said revenue from progressive taxation has the capacity to fund the country’s health and education system.

“The wealthiest 10% own more than 72% of wealth, and the top 5% own nearly 62% of the total wealth, which is higher than the pre-pandemic years (2018-19),” said a report by Oxfam India titled ‘Survival of the Richest: The India Supplement 2023’.

It further said the top 1% own more than 13 times the wealth owned by the bottom half of society, with nearly 40.6% of the total wealth in India. The bottom 50% of the population has around 3% of the total wealth.

The country still has the world’s highest number of poor at 228.9 million. On the other hand, the total number of billionaires in India increased from 102 in 2020 to 166 in 2022.

The combined wealth of India’s 100 richest has touched Rs 54.12 trillion, the report said, adding that the wealth of the top 10 richest stands at Rs 27.52 trillion, which is 32.8% higher than in 2021.

The report has suggested taxing the wealth of the richest 1% on a permanent basis, with higher rates for millionaires, multi-millionaires and billionaires. The government currently levies a surcharge on those earning over Rs 50 lakh per annum, with the rate being 37% for those earning above Rs 5 crore per annum.

However, according to Oxfam India’s estimates, 1% of wealth tax on Indian billionaires can fund the National Health Mission with an allocation of Rs 369.6 billion for three years. Taxing the top 10 billionaires at 5% will help cover the entire cost of tribal healthcare for five years, it further said. Taxing the top 100 Indian billionaires at 2.5%, or taxing the top 10 Indian billionaires at 5% would nearly cover the entire amount required to bring the children back into school.

“A one-off tax on unrealised gains from 2017-2021 on just one billionaire, Gautam Adani, could have raised Rs 1.79 trillion, enough to employ more than five million Indian primary school teachers for a year,” the report said. If India’s billionaires are taxed once at 2% on their entire wealth, it would support the requirement of Rs 404.23 billion for the nutrition of malnourished in the country for the next three years.

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“The rising wealth inequality calls for immediate interventions to reduce the existing inequality by taxing the rich and enhance the access to public services for the poor,” it said.

The report has also suggested easing the tax burden on the poor and the marginalised by reduction of slabs of the goods and services tax on essential commodities, which forms the majority of the poor and middle classes and spending habits, and a hike in the taxes on luxury goods.

It has suggested improving access to public services like health and education by measures including enhancing the budgetary allocation for health to 2.5% of GDP by 2025 and that for education to global benchmark of 6% of the GDP.

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Highlighting the rise in inflation that has impacted the cost of living, the report has also proposed ensuring social protection for the workforce, especially those in the informal sector, and strengthening the monitoring and tracking mechanisms that ensure protection of the labour class of the country.

The recommendations come just ahead of the Union Budget 2023-24, when it is expected that the government will continue to provide support in the form of higher allocations to food and fertiliser subsidy as well as MGNREGA as it tries to offset the impact of rising inflation on poor.

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First published on: 16-01-2023 at 06:00 IST