India’s IRSA suggests wealth tax

The Indian Revenue Service Association (IRSA) has suggested the imposition of wealth tax on the super rich, with net wealth at least Rs5 crore and a one-time COVID relief cess of 4 per cent.

Titled Fiscal Options & Response To COVID-19 Epidemic (FORCE), the report of recommendations on revenue mobilisation amid the coronavirus crisis said that in times like these, the so-called “super richa have a higher obligation towards ensuring the larger public good”. The tax officers’ body said they can be taxed through two alternative means, for a limited, fixed period − 3-6 months.

It noted that the super rich enjoy a higher capacity to pay with significantly higher levels of disposable incomes compared with the rest. Also, they have a higher stake in ensuring the economy springs back into action, and their current levels of wealth itself is a product of the social contract between the state and its citizens.

It suggested raising the highest slab rate to 40 per cent for total income levels above a minimum threshold of Rs1 crore or re-introduction of the wealth tax for those with net wealth of Rs5 crores or more. “Most high-income earners still have the luxury of working from home, and the wealthy can fall back upon their wealth to cope with the temporary shock. In view of several European economists, taxing the wealthy would be the most ‘progressive fiscal tool’, as wealth is far more concentrated than income and consumption,” it said.

Suggesting the impostion a one-time COVID relief cess, the IRSA said as opposed to surcharges, cess are more broad-based since they relevied on every taxpayer and are likely to mobilise more revenue as well.

Indo-Asian News Service