Letter to BS: Will re-introduction of wealth tax help the Indian economy?

This refers to “Budget 2020: Time to re-introduce wealth tax, says Abhijit Banerjee” (January 28). Notwithstanding Nobel laureate and economist Abhijit V Banerjee’s latest call for the re-introduction of a wealth tax in India considering the rising inequality, the nation’s current economic scenario does not justify such a plan. In fact, such a move might turn out to be counterproductive as our economy is facing a huge mismatch between demand and investments, which is essential to achieve the desired level of the economic growth. In fact, our experience shows the imposition of such draconian taxes has failed to serve the real purpose as such a regime is a fertile ground to breed ways to evade and avoid the same.
Mind you, the maximum marginal rate of income tax happened to be as high as 97.5 per cent during the tenure of Indira Gandhi (being the PM and FM both) in the 1970s. But it was later brought down, realising the folly of persisting with such a structure. As mentioned in this report, the archaic Wealth Tax Act 1957 was discarded in 2016, that is, during PM Modi’s first tenure. For sure, there must have been valid grounds for doing so. It might not be prudent to move back to such provisions, more so when the government is in the process of ushering in the much needed tax reforms to boost the economy.

SK Gupta, Delhi

Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard

Nehru House, 4 Bahadur Shah Zafar Marg

New Delhi 110 002

Fax: (011) 23720201 · E-mail: letters@bsmail.in
All letters must have a postal address and telephone number

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s