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The Home Minister, Mr P. Chidambaram, wants the rich to be taxed more to sustain the Indian dream of inclusive growth.
“I am (was) the Finance Minister who slashed your tax rates. And I am now suggesting to raise the rates, putting the onus on the richer classes,” he said, while addressing a function of All India Management Association here on Wednesday.
Even as preparations for the next Budget (2012-13) have started, Mr Chidambaram said, “We must raise the tax revenue to raise our non-debt revenue. I know my suggestions will not receive popular support but I think, I can summon the courage to make the statement.”
Capital formation
As Finance Minister between May 2004 and November 2008, Mr Chidambaram had slashed taxes, winning much popular approval. He said that in the initial years, capital formation was an issue that required slashing tax rates. “But today, capital formation, both locally and internationally, is no longer a challenge,” he said.
The Home Minister's suggestions are in line with the proposals in the US and Europe to raise taxes for the rich.
According to the Approach Paper to the 12th Plan, tax revenue is expected to rise from the current 7.4 per cent to 8.9 per cent next year and the non-tax revenue is expected to decline from 14 per cent in the current year to 13.11 per cent as a percentage of GDP. This would lead to a decline in aggregate resources.
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