Argument for taxing 'very rich' should be considered: FM

Chidambaram said we should have stability in tax rates but we should consider the argument whether the very rich should be asked to pay a little more on some occasions

Singapore: Indian Finance Minister P Chidambaram, who has talked about a stable tax regime during his meetings with foreign investors in the last two days, has said that the argument for taxing the very rich "a little more" should be considered, reports PTI.

 

"I believe in stable tax rates. However, I must concede that there is an argument, underline the word argument, that when the economy requires, when the government requires more resources the very rich should willingly pay a little more.

 

"That is not to say that tax rate should not be stable. I think we should have stability in tax rates but we should consider the argument whether the very rich should be asked to pay a little more on some occasions," he told CNBC TV18.

 

However, he hastened to add, "but that is not a view I am expressing. That is simply an argument that I have heard and I am repeating."

 

Chidambaram said tax rates that were announced in 1997 (in the Budget he had presented then), have remained and have survived four governments and four finance ministers.

 

On the Budget to be presented next month, he said the Budget is not drawn up keeping an election in mind. "The election is a good 14 months away from the Budget. The Budget will be a responsible budget".

 

The Finance Minister said if on 28th February he could show that the government has kept fiscal deficit below 5.3% and if Budget estimates show that the next year's fiscal deficit will be below 4.8%, then he can show a healthy growth in revenues over next year.

 

"I think that is the time when rating agencies should consider moving us from... I mean improving the outlook and then improving the rating," he said.

 

Several experts including chairman of Prime Minister's Economic Advisory Council (PMEAC) C Rangarajan have underlined the need for imposing higher rates of taxes on super rich.

 

On Wednesday, Wipro Chairman Azim Premji had said the suggestion for taxing the super-rich was a "politically" correct thing to do, but expressed doubts whether the government will actually implement the proposal.

 

India taxes income at three rates - 10%, 20% and 30%. These rates were fixed in 1997.

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COMMENTS

M G WARRIER

5 years ago

Whether you call it tax or forgoing some benefits, FM should not feel shy about asking super-rich to participate in the development process by contributing their share from the accumulated resources with them to partially ‘cleanse’ India’s Balance Sheet. A substantial portion of the ‘cash’ with the super-rich has their origin in defective policies of government. If government had ensured some self-regulation to ensure payment of ‘real’ wages, payment of market-related prices for the resources they used and reasonably transparent accounting of sources and uses of funds combined with a commitment to plough back at least a part of the profits made out of public funds and resources like land, electricity, water etc they received at subsidized rates, the position would have been different.

IMF chief dedicates WEF moments to Delhi gangrape victim

The IMF Managing Director emphasised that the expectations of Indian women must be met and rued that policymakers had failed to pay attention to the crucial issues of equitable distribution and gender equality

Davos: Making a passionate appeal for fairness and gender equality, International Monetary Fund (IMF) chief Christine Lagarde invoked the Delhi gangrape incident during a speech at the World Economic Forum (WEF) while emphasising that expectations of Indian women for greater respect and justice must be met, reports PTI.

 

She also remembered the young Pakistani victim Malala Yousafzai while addressing the gathering at the annual WEF meeting.

 

"I dedicate the moment (of addressing WEF annual meet) to Malala, daughter of Pakistan, and another daughter in India (rape case)," IMF chief Lagarde said last evening.

 

Touching upon India, the IMF Managing Director emphasised that the expectations of Indian women must be met and rued that policymakers had failed to pay attention to the crucial issues of equitable distribution and gender equality.

 

"... But you will ask what it has to do with economy. It is indeed about economy and equality and bringing in prosperity. No policymakers have paid enough (attention) to the fact that more equal distribution of income would help in supporting women better. Gender inequality is also very important and the policymakers have not paid enough attention to either of the two. The fact is when women do better the country does better and policymakers need to understand this," Lagarde said.

 

In a case that had shocked the nation and triggered protests in India, a 23-year-old student was brutally gangraped in a moving bus in New Delhi on 16th December last year and later she died at a hospital in Singapore.

 

Earlier in October, Pakistani teenage activist Malala became the target of Taliban militants. She was shot in the head for campaigning for girls' education and had to be flown to the UK for medical treatment. .

"Let me turn to what I see as the second major aspiration of the new generation and the new global economy: stronger inclusion. Our close-knit world is a participatory world. The new generation demands opportunities for all and insists on tolerance, respect, and fairness for all," Lagarde said.

 

"Just look at some recent examples from the yearnings on the Arab Street for greater dignity and opportunity, to the brave cry of young women for education and equality, and to the heartfelt urge of Indian women for greater respect and justice. These demands must be met," Lagarde said.

 

She also stressed on the need to fight against climate change. "If we don't take action regarding climate change, our future generation will be roasted, toasted, fried and grilled".

 

By 2025 she said that two-thirds of the world population would be in India and the youth is going to be a strong force across the world.

 

"How can we successfully navigate in this world of future? This new generation sings differently. There are Facebook and Twitter and if we rank them as countries they would be third and fourth largest in the world," she noted.

 

The IMF chief also said that there should be zero tolerance for corruption, besides there should be a sense of accountability in tackling the global crisis.

 

"Things are changing but we need to see more and better changes in 2013... We need cross border cooperation on issues like shadow banking and derivatives. If we look beyond the short- term we would indeed move past the crisis," she added.

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