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Special COVID cess, new tax on the rich mooted to raise revenue

IRS Association paper suggests ways for government to mobilise needed revenue in this time of crisis

Some members of the Indian Revenue Service (IRS) Association have suggested a special COVID-19 草草影院最新地址入口relief cess, a 40% taxation rate for the rich and the return of the wealth tax and inheritance tax as ways for the government to mobilise needed revenue in this time of crisis.

草草影院最新地址入口In a policy paper submitted by the association to the Finance Minister, 50 officers have suggested that the money be spent on giving a ₹3,000-5,000 monthly cash transfer to the poorest 12 crore households for the next six months, as well a slew of measures to support small enterprises and revive demand in the economy.

草草影院最新地址入口The association made it clear that the paper did not claim to reflect the views of all IRS officers. The Central Board of Direct Taxes said it had initiated an inquiry into the officers, as they had not sought permission before going public with their personal views on official matters, which is a violation of extant Conduct Rules.

“The government needs to spend considerably more to revive the economy,” said the paper, adding that the additional revenue needed should be raised in ways that would not burden the already distressed common man. “In times like these, the so called “super rich” have a higher obligation towards ensuring the larger public good ... Most high-income earners still have the luxury of working from home, and the wealthy can fall back upon their wealth to cope with the temporary shock.”

Two options

草草影院最新地址入口The paper suggests two options to tax this segment of the population, both of which would be imposed for a limited period of time: hiking income tax rates to 40% for those with a total annual income above ₹1 crore, or introducing a separate wealth tax on those with a net wealth above ₹5 crore.

The inheritance tax, which was abolished in 1985 could be reintroduced, both as a measure to raise money and bridge the wealth inequality divide, said the paper. A hike in the surcharge on foreign companies with branch offices in India was also suggested as a way to mobilise revenues.

The paper recommends a one-time COVID-19 relief cess of 4% on taxable income above ₹10 lakh, in addition to the existing 2% cesses for health and education. This could raise ₹15,000-18,000 crore, it estimated. Creating tax-saving schemes like COVID-19 saving certificates could also help generate money.

Digital economy

Noting that the corona economy is a digital economy, with more consumption of web services during this time, the paper suggested that online streaming and e-commerce companies such as Zoom, Netflix and Amazon Prime be slapped with an additional 2% tax in the form of the equalisation levy.

草草影院最新地址入口Incentives to encourage corporate social responsibility spending on COVID-19 relief was needed, said the paper, adding that donations to Chief Minister’s Relief Funds should be counted as CSR, just like contributions to the PM-CARES Fund.

Cash transfer

According to the paper, the top spending priorities of the government need to include an enhanced cash transfer scheme for the poor, an expansion and redesign of the MGNREGA rural jobs programme and wage support for micro, small and medium enterprises. A three-year tax holiday for firms in the healthcare sector and zero tax for frontline health workers this year was also proposed.

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Printable version | Apr 27, 2020 8:24:36 AM | http://hwgcfsf.com/news/national/special-covid-cess-new-tax-on-the-rich-mooted-to-raise-revenue/article31440173.ece

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