India that is the world’s second largest democracy that houses, the world’s third largest number of billionaires, ironic this figure is when it is adopted by the Forbes with an equally amazing contrast to the USA and China. These countries are far beyond the reach of the Indian country in terms of HDP (Human Development Profiling), our GDP since the liberalisation is shaky. The fiscal deficit is 4.6% of the 2 trillion dollar economy. The unemployment is rampant and industrial output is also very meagre. The country being a socialist in conception is vociferously becoming a capitalist economy, wherein entrepreneurs like Mukesh Ambani, have the capability of being branded as a government within the meaning of the Article 12 of the Indian constitution.
The new right wing coalition leading the country has been brainstorming over the issue of generation of revenues for its developmental agenda prior to the budget session will be a very keenly observed globally as well as nationally, the key sectors being railways, infrastructure, banking (which has already been infused with fresh funds), taxation regime.
The keen approach towards a phased implementation towards GST (Goods and Services Tax), bringing a uniformity in the taxing regime in the country thus centralising the revenues boldly, is also accompanied by various other taxes and duties, of them all is the Inheritance tax, coupled with the Wealth tax.
Where the wealth tax was lauded as a socialistic measure and pro-poor in its essence wherein all the personal assets of people earning above 30 lakhs per annum are taxed whether they are profitable or not, the inheritance tax is again a tool of the same kind focussing on the billionaires, millionaires, and others who inherit their family business to be taxed on the assets they inherit.
In a nutshell, inheritance tax is an estate tax that people have to pay for inheriting a priced property, this has been even demanded by the industry for very obvious reasons, but the edge to the recent discussion on inheritance tax amidst the run up to the budget has been given by the governor of the RBI, Raghuram Rajan, who is quoted as saying, “I would argue rather than a blanket inheritance tax, let’s change the culture. Make it such that people don’t want to have a lot of wealth for their children”, the man seems to have provided very nice piece of thought on the logic and morals behind taxing the wealthy.
It is often argued that the very intellectual lawyers and chartered accountants help their clients to hide their taxes. This has been adding to, in pieces to our 4.6% fiscal deficit, and the said tax would again be one motivator for the industry hot-shots to hide their estates and mechanise the intellectuals towards their aid thus yielding in a stagnant culture of hide and seek that has been continuing for ages now!
The logic here is that we need money from the wealthy to make for the ills of the needy but the wealthy are the winners in a democracy and deserve to own their property unlike the Platonic concepts, which can’t be enforced partly through taxing them, thus assuming the authoritarian and ineffective use of the taxation mechanisms.
Morals, this author feels relying on Mr. Rajan’s remarks, play a better role, the wealthy should be more anthropological or human loving than money loving. 85-90 % of all the businesses are owned by families, not mention the common household names ‘Tata-Birla’ are just the beginning to an entire world of family businesses, thus if they really do realise their corporate social responsibility, and the fact that charity does no harm, will make a good society, where the Marxists won’t be the rabble rousers and the stresses on the government will also ease out, the mutual co-operation will really prove to the world, that India is really a mixed economy, not just on papers but in its spirit.
Not to mention, the raise in the number of foundations, like the Azim Premji Foundation are involved in setting up standards, thus the focus must be on changing the culture, focussed on the morals rather than applying logic and imposing another tax to profit our learned lawyers. The motivation has to be done very seriously so as to benefit those who really are needy and again the corrupt practices must be checked so as to bring meaning to the whole moralistic exercise of donating a share of one’s own achievements for the welfare of the public.
Though the finance ministry has been mum on the issue, we likely do not see a declaration regarding inheritance tax in the coffers, as ‘Make in India’ is the focus of the government, but the corporate social responsibility may be effectively popularised and employed to develop for the needs of the real needy, while the investors make in India.