Policymakers in India can consider imposing a marginal consumption tax or spending tax side-by-side with existing income taxes, which can then be phased out over time.
Author
Deepanshu Mohan, Professor of Economics and Director, Centre for New Economics Studies, O.P. Jindal Global University, Sonipat, Haryana, India.
Summary
It’s election season and knives are being drawn out in the nature of debates, promises, and accusations by leaders of the BJP and the Congress.
While PM Modi at a rally in Rajasthan called out the Congress party on its “plan to redistribute wealth amongst the minorities,” Congress’ senior leader P Chidambaram attacked the PM for his “outrageous remarks” filled with “absolute falsehood, brazen mendacity.”
At the same time, another issue that has picked national attention, particularly in newsroom discussions, is ‘inheritance tax’. It started with comments from Sam Pitroda, Chairman of the Indian Overseas Congress, advocating an American-style inheritance tax policy in India.
Citing the US inheritance tax policy, Pitroda said, “Probably 45 per cent of a US citizen’s wealth can be transferred to his children, 55 per cent is grabbed by the government. That’s an interesting law.” Reacting to Pitroda’s remarks, Prime Minister Narendra Modi charged head-first, alleging that Congress would impose such a tax if voted to power.
Published in: The Quint
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