New Delhi. To address the growing inequality in India, there is a need to impose a 2% tax on net wealth of more than Rs 10 crore and an inheritance tax of 33%. This has been suggested in a research paper prepared under the leadership of economist Thomas Piketty.
This paper proposes a comprehensive tax package on the wealthy to tackle the massive concentration at the top of the wealth distribution and create valuable fiscal space for investment in vital social sectors.
The paper titled ‘Proposals for a wealth tax package to tackle extreme inequalities in India’ says, “An exceptionally large tax revenue must be raised while keeping 99.96 per cent of adults unaffected by the tax.” It says, “In the baseline scenario, a 2 per cent annual tax on net wealth above Rs 10 crore and a 33 per cent inheritance tax on wealth above Rs 10 crore would contribute a revenue of 2.73 per cent to GDP.” The paper says that the taxation proposal needs to be accompanied by clear redistributive policies to support the poor, lower castes and the middle class.
According to this proposal, in the basic scenario, there will be a possibility of almost doubling the current public expenditure on education. It has remained stable at 2.9 percent of GDP in the last 15 years, whereas the National Education Policy 2020 has set a target of six percent expenditure. This research paper has been written by famous economist Thomas Piketty of Paris School of Economics, Lucas Chancel of Harvard Kennedy School and World Inequality Lab and Nitin Kumar Bharti of New York University.
This research paper, while stating the need for a large-scale debate on the taxation proposal, says that a broad democratic debate on tax justice and wealth redistribution will help build a consensus. The debate on income and wealth inequality in India has gained momentum in recent times. The report ‘Income and Wealth Inequality in India 1922-2023’ released earlier also says that economic inequalities in India have reached historic heights. It says that these extreme inequalities and their close relationship with social injustice can no longer be ignored.
The authors of the report said in their report released on March 20 that inequality in India has been increasing continuously since the beginning of the 2000s. In the year 2022-23, the share of income and wealth of the top one percent of the country’s population had reached 22.6 percent and 40.1 percent respectively.
According to this, the increase in top level inequality between the years 2014-15 and 2022-23 has been seen in the form of concentration of wealth.
The paper says, “The high share of income and wealth held by the top one per cent of the population in FY2022-23 was at its highest historical level and this ratio is the highest in the world, even higher than South Africa, Brazil and the US.”