‘Self-Defeating Levy’: Decoding Super-Rich Tax With Raghav Bahl
“When you raise taxes beyond reasonable levels, what happens is a flight of capital,” says The Quint’s Raghav Bahl.
The first Union Budget under the second tenure of the Modi government significantly increased taxes to be paid by those earning above Rs 2 crore. According to The Quint’s Editor-in-Chief Raqhav Bahl, this super-rich tax is a “self-defeating levy” because when one raises taxes beyond reasonable levels, what happens is a “flight of capital.”
“Last year, we saw such a flight of capital out of India. So many millionaires actually left the country… When wealthy people leave a country, they actually take the national wealth out of the country,” Bahl said during a webinar that was broadcast live on YouTube exclusively for The Quint’s members. The viewers posed questions related to the specifics of the Union Budget and other important aspects of India’s economy.
While calling for a progressive tax structure, where the wealthy pay more taxes, Bahl added that “it has to be balanced against a rational and reasonable level.”
Summing up the state of the economy and how this Budget has tackled the various issues, Bahl remarked:
“We are increasing personal taxes, we are increasing corporate taxes through surcharges, we haven’t demolished taxes which are outside the GST architecture, our GST rate continues to be very high, our GST collections continue to be very poor, our whole tax net is so much more severe on the salaried and not on the non-salaried… I don’t think this Budget has done anything specific to address these issues and in fact, they have made it worse by the tax on the super-rich.”
With this year’s Budget, presented by Finance Minister Nirmala Sitharaman, the highest applicable income tax rate would now be 39 percent for those earning between Rs 2 crore and Rs 5 crore, and 42.74 percent for those earning more than Rs 5 crore.
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