NEW DELHI: A controversial proposal to tax the rich is back on the table, with a section of the Prime Minister’s Economic Advisory Council (PMEAC) strongly pushing to impose additional tax for a short period to make up for the revenue loss during the pandemic.
“In the internal economic review meeting, many members of the PMEAC had suggested that many countries are using wealth tax to compensate for revenue. The proposal was that India can reconsider it for companies that are resilient or had posted a healthy double-digit growth as one-time measure,” a senior finance ministry official, who was aware of the meeting earlier this month, said.
The meeting was attended by officials of the finance ministry, the Prime Minister’s Office (PMO), PMEAC and Niti Aayog. Some officials of the finance ministry are also in favour of the proposal, the officer said. This is not the first time the rich tax has been mooted. When the proposal to slash corporate tax was first drafted, it had a wealth tax component on high profit earning firms. But in the final draft by then revenue secretary Ajay Bhushan Pandey, the wealth tax clause was dropped.
Ahead of this year’s budget, the proposal was back on the table but was decisively rejected by the PMO, which wanted to present a business friendly image. According to Karthik Natarajan, partner, Bhuta Shah & Co. LLP, “The temptation, however easy, to load the thrust of taxes on a section of economic citizenry may best be avoided as the corporates are an inseparable part of the society and have larger contributions to make in terms of productive deployment of the factors of production.”
Demand to tax the rich growing globally
The demand to tax the rich has increased globally, especially at a time when the income divide has widened during the pandemic with a large number of middle class people pushed into poverty while the ultra rich are getting richer