Robin Hood robbed the rich and fed the poor. This is what made the bandit a hero. Successive finance ministers have tried to assume Robin Hood’s mantle by taxing the rich and exempting the poor.
But there are certain “blind spots” in this socialist approach to taxation. For instance, there is no tax on agricultural income. That was okay a few decades ago when Indian farmers were poor and struggling in a predominantly agrarian economy. Now farmers grow strawberries and orchids and drive around in limousines. It is high time the tax exemption to the “creamy layer” of farmers is withdrawn.
Similarly, export income should be treated as any other income and taxed accordingly. Export firms earn thousands of crores but pay no tax. The government also needs to be realistic about betting on sport events. If lottery is legal, why not betting on whether Dada will score a century in the World Cup?
Encouraged by the Rs 8,949 crore collected through the 2% education cess last year, Finance Minister P. Chidambaram has increased it to 3%. He could have removed it altogether and instead taxed rich farmers, exports and betting to bring in more than three times the revenue. Here’s how.
Copyright©2021 Living Media India Limited. For reprint rights: Syndications Today