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NEW DELHI: A controversial proposal to tax the rich is back on the table. A section of the Prime Minister’s Economic Advisory Council (PMEAC) is pushing for additional taxes to be levied for a short period of time to offset the loss of revenue during the pandemic.
“During the internal economic review, many PMEAC members suggested that many countries use wealth tax to offset revenue. The suggestion was that India could reconsider this for companies that are resilient or have seen healthy double-digit growth as a one-off move, ”said a senior Treasury official who was aware of the meeting earlier this month.
Officials from the Treasury Department, PMO, PMEAC and Niti Aayog attended the meeting. Some Treasury officials are also in favor of the proposal, the official said. This is not the first time the rich tax has been discussed. When the proposal to cut corporate tax was first drafted, it had a wealth tax component for high-profit companies. In the final draft of the then Finance Minister Ajay Bhushan Pandey, however, the property tax clause was deleted.
Before this year’s budget, the proposal was back on the table, but was decidedly rejected by the PMO, which wanted to convey a business-friendly image. Karthik Natarajan, Partner at Bhuta Shah & Co. LLP, explains, “The temptation to shift the tax boost to part of the economic citizenship is best avoided because companies are an inseparable part of society and make greater contributions to productive implementation of the factors of production. “
Demand for taxation of the world’s growing rich
The demand to tax the rich has increased globally, especially at a time when income inequalities widened during the pandemic and large numbers of the middle class have been pushed into poverty as the ultra-rich get richer