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In Budget 2013-14, the Government should expand the wealth tax base and re-introduce inheritance tax (withdrawn in 1985) to mop up resources for flagship schemes, the People’s Budget Initiative (PBI) has suggested in its recent meeting with the Finance Minister.
The PBI, an umbrella of 400 civil society organisations, also urged the Finance Ministry to hold pre-Budget consultations in October to make it more inclusive by giving space to grassroots organisations.
The extent of wealth inequality in India is large, as indicated by the fact that it the country is home to 55 ‘dollar billionaires’ worth $240 billion, according to Forbes magazine. The top five per cent of India’s households own 38 per cent of the country’s total assets, according to the Planning Commission.
PBI, therefore, estimates that the revenue potential of inheritance and wealth tax is at the least Rs 63,539 crore a year, around 0.8 per cent of GDP (2011-12).
Addressing a press conference here on Friday, Subrat Das of Centre for Budget and Governance, said “In a significant leap, we have tried to convince the Finance Ministry to make public information on commodity-wise details of indirect taxes collected. This will enable us to assess the implications of the indirect tax policies on the poor.”
In its pre-Budget demand charter, the PBI also suggested that tax breaks should be project-specific and should not be treated as a ‘cost-saving’ source for corporates to get sustained tax holidays.
It also urged the Finance Ministry to bring out a position paper on tax exemptions or revenue foregone. “There is need for greater transparency and accountability in the Budget process,” it said.
Among other demands, PBI wanted the Government to provide 100 per cent premium for crop insurance, with the panchayat as the unit of insurance coverage, and cited the effective model followed by the Odisha Government.
Another key demand related to transparency and accountability for proper utilisation of Budgets earmarked for the Scheduled Caste Sub Plan (SCSP).
“Currently only 2.47 per cent is allocated for SC schemes and 1.3 per cent of ST schemes, while the policy clearly states 16.2 per cent and 8.2 per cent for SCs and STs, respectively, should be set apart for schemes and projects exclusively for the benefit of these communities,” said Paul Divakar of the National Campaign on Dalit Human Rights.
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