Taking his cue from Europe, where the rich have offered to be taxed more to rescue economies out of the ongoing crisis, Home Minister P. Chidambaram on Wednesday made out a case for higher taxes for the wealthy, even while admitting that “many people” would not like his idea.
“We must raise the tax revenue to defend [the expected aggregate decline of resources]. I know many people won't like this. But, I think, I can summon up the courage to make the statement,” he said in his address on ‘Inclusive growth: A challenging opportunity' organised by the All India Management Association (AIMA) here
Interestingly, it was during Mr. Chidambaram's tenure as Finance Minister from May 2004 to November 2008 that income tax rates were slashed, and he was, in fact, lauded by India Inc. for presenting a ‘dream budget'.
“I [was] the Finance Minister who slashed your tax rates. Therefore ... you must be prepared to pay higher tax rates, especially the rich must be prepared to pay higher tax.”
In Europe, Mr. Chidambaram said, the rich were getting together to say “please tax us more.” However, “certainly this is not the place, nor I am the person to say what tax should be raised. But we should seriously consider how to raise the tax revenue of the country”.
Arguing his case for higher tax on the rich, he said the theme of faster and more inclusive high growth was to be carried forward during the 12th Plan beginning April 2012, and in its pursuit, a number of programmes, including 13 major schemes, were rolled out by the government with a budget of Rs.1,88,573 crore. “However, a question about the desired outcome of these promising schemes needs to be addressed in light of poor design, measure of quality and accountability.”
The “inclusive” growth must be reflected in the day-to-day lives of ordinary people, and the key parameters to be considered should not be GDP (gross domestic product) or per capita income, as these might consider a sectoral or State perspective. Growth ought to be reflected in access to education and healthcare facilities, good infrastructure and in reduced infant and maternal mortality rates.
“For ensuring inclusive growth, we need sustained availability of resources. Non-debt revenue should be increased; therefore, the rich must be prepared to pay more tax. Consequently, the government shall be liable and accountable to the taxpayers on the way the money is being spent,” Mr. Chidambaram said.
On the occasion of the AIMA's 38th national management convention, the Minister conferred ‘Managing India' awards for emerging business leaders for the year on GVK Industries vice-chairman G.V. Sanjay Reddy and Bajaj Auto managing director Rajiv Bajaj for their contribution to emerging India. He conferred ‘The Honorary Fellowship' award on Yes Bank CEO and managing director Rana Kapoor in recognition of his contribution to inclusive growth.