THIRUVANANTHAPURAM: Proposing a simpler way to reduce inequality, Vito Tanzi, former Director of the Fiscal Affairs Department at the International Monetary Fund, suggested that India could use its GST system to directly put money into the hands of all citizens.
Speaking at a conference on GST at the Centre for Development Studies in Thiruvananthapuram, Tanzi proposed replacing the current multiple GST rates with a single uniform rate on all goods and services, while keeping exports exempt and taxing imports.
He said the entire GST revenue collected by the government could then be equally distributed to every citizen through direct transfers, such as bank deposits made monthly or annually.
“Rich people spend more, so they pay more GST. But everyone gets the same amount back. This means the poor benefit more,” explained Vito. In simple terms, those with lower incomes would receive more money than they pay in tax, while the wealthy would contribute more than they get back. This, he said, would make the system fair without the need for complicated tax slabs, exemptions, or targeted welfare schemes.