Helping You Build Wealth With Honest Research
Since 1996. Try Now

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Are higher taxes on super rich justified?
Fri, 25 Jan Pre-Open

First came Britain and France, then Australia and the United States. Now it is India's turn. The debate for having a 'super-rich' tax in India is getting intense ever since the chairman of the Prime Minister's Economic Advisory Council (PMEAC), C Rangarajan, mooted a proposal in this regard. According to Rangarajan, the time has come when the government should either look at imposing surcharge on income above a threshold or a higher tax slab to augment the government revenue and bridge the fiscal deficit.

However, India Inc has came out strongly against the proposed move to tax the super-rich, saying the move would discourage entrepreneurship and lead to professionals relocating to low tax domiciles such as Singapore, Dubai or London.

India's tax revenue base has remained stagnant over the years. The country's tax to GDP ratio, an important indicator to measure tax administration, has remained abysmal. As per reports, the ratio has nudged downwards from a high of 11.9% of GDP in 2007-08 to 10.1% of GDP in 2011-12. This is a poor indicator reflecting inefficiencies prevailing in the system considering the overall growth rates have improved barring the last two fiscal.

The tragedy of the Indian tax system is that the honest tax payer is savagely attacked again and again. The dishonest tax payer seldom pays his tax dues. The areas of tax evasion and generation of black money are well known. Have we made any attempt to check tax evasion in sectors like liquor, real estate, cinema and private professional colleges? These categories continue to indulge in large-scale tax evasion without any action by the IT Department. By taxing the super-rich, we will only place a further premium on dishonesty and punish the honest tax payer.

If the object is to earn greater revenue, then taxing the super-rich will be counterproductive. The marginal gain in revenue will be temporary and there will be greater loss of revenue through lower collection of indirect taxes. It will be better if the Central Government re-examines the myriad wasteful welfare schemes. A 5% reduction in these will not only eliminate the need to tax the super-rich, it may even result in reducing rates of our indirect taxes.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "Are higher taxes on super rich justified?". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Agora Research Private Limited.

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Agora Research Private Limited (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.