SME Times News Bureau | 10 Jan, 2013
Advocating for
higher rates of taxes for super rich, Prime Ministerâs economic advisor C.
Rangarajan on Saturday said that the forthcoming budget could look at imposing
surcharge on income above a threshold.
"The idea is that people above a certain income level
should be taxed. There are two ways of raising the tax rates for the
super-rich. The highest tax slab is 30 percent. We can add an additional higher
slab, or we can keep the slab the same but impose a surcharge for income above
a particular level," he said.
Rangarajan said the logic behind the idea is that the tax-GDP ratio should go
up as there was need for greater money flow into the economy.
His suggestion comes
ahead of the Budget for 2013-14 for which Finance Minister P. Chidambaram has
started consultations with different interest groups.
However, he replied in the negative when asked whether a
formal proposal has been placed before the union finance ministry on taxing the
super rich. "This is only an idea," Rangarajan said.
India taxes income
at three rates - 10 per cent, 20 per cent and 30 per cent. These rates were
fixed in 1997 by the then Finance Minister Mr. Chidambaram.
Recently Finance
Minister P Chidambaram had called for a debate on the need of
inheritance tax in India, wondering if the country had paid enough attention to
accumulation of wealth in the hands of a few.
Earlier this week,
the U.S. Congress voted for raising taxes on rich Americans, as part of
resolutions of crisis over the so-called 'fiscal cliff'. The U.S. legislation
raises taxes on individuals earning more than $400,000 per year, and on couples
earning more than $450,000.
Rangarajan, a former
RBI governor, also stressed for fiscal discipline to promote growth.