C Rangarajan for higher taxes for super rich

Pitching for higher rates of taxes for super
rich, Prime Minister's economic advisor C
Rangarajan today said that the
forthcoming budget could look at
imposing surcharge on income above a
threshold.
"... one need not disturb the structure of
income tax system as it is now. But add a
surcharge for income above particular
level. I believe as we go along, we need
to raise more revenues and the people
with larger incomes must be willing to
contribute more," he told reporters on
the sidelines of Financial Inclusion Day
seminar.
His suggestion comes ahead of the
Budget for 2013-14 for which Finance
Minister P Chidambaram has started
consultations with different interest
groups.
India taxes income at three rates - 10 per
cent, 20 per cent and 30 per cent. These
rates were fixed in 1997 by then Finance
Minister P Chidambaram.
Interestingly, recently at a lecture to
honour Raja Chelliah, Chidambaram had
called for a debate on the need of
inheritance tax in India, wondering if the
country had paid enough attention to
accumulation of wealth in the hands of a
few.
Earlier this week, the US Congress voted
for raising taxes on rich Americans, as part
of resolutions of crisis over the so-called
fiscal cliff. The US legislation raises taxes
on individual earning more than USD
400,000 per year, and on couple earning
more than USD 450,000.
The veteran economist, a former RBI
governor, also stressed on fiscal discipline
to promote growth.
"We need to bring down the fiscal deficit
over next few years. For this purpose, we
need to act on expenditure side and as
well as revenue side. On the expenditure
side, we must focus on how to prune the
subsidies and reduce them as a
proportion of GDP," Mr Rangarajan said.