Former finance minister and parliamentary standing committee on finance chairman Yashwant Sinha on Thursday said taxing the super rich was a bad idea since it would end up taxing the honest and salaried more. Prime Minister’s Economic Advisory Council Chairman C Rangarajan had recently in an interview to The Economic Times suggested that India can think of a higher tax rate on substantially high incomes.
“If the super rich are considered to be those with Rs 10 lakh taxable income in a year then you are reaching out to the upper crust of the middle class and not really reaching out to the HNIs (high networth individuals). If you increase the tax rate then even these will start going out and evade taxes,” Sinha told The Indian Express. He also spoke against inheritance tax, pointing out that he was the one who had abolished gift tax.
Sinha noted that tax rates are well settled and the government should not meddle with it. Pointing out that most of the HNIs and super rich are self employed, Sinha said that it is easy to catch the salaried individual but quite difficult when you deal with the self-employed. “So any such move will end up increasing tax on the honest tax payers,” he pointed out.
While the fiscal deficit is a growing concern for the economy, Sinha said the government can reduce its expenditure and that will be a proper thing to do. He, however, added the current finance minister may resort to unconventional methods. “He can postpone the fertiliser, food and oil subsidy and may save even up to 1 per cent of the GDP. He can reach out to corporates and say—pay higher advance tax and we will return it in the first quarter. The worst thing that he can do is that he will push some expenditure below the line as he had done in his earlier budgets.”