Our country’s Finance Minister - Mr P. Chidambaram seems to be finding new ways to narrow the fiscal deficit in the coming years. And all focus this time is on accumulation of wealth to achieve the same.

Recently, Finance Minister turned the focus towards the issue of accumulation of wealth and said time has come for a debate on imposition of "inheritance tax". "Sometimes I doubt whether we have taken moderation (in tax rates) too far. Have we paid little attention to accumulation of wealth in few hands? I am still hesitant to talk about inter-generational equity and, therefore, inheritance tax. I think these are the questions we should debate," he said, while addressing a National Institute for Public Finance and Policy (NIPFP) function.

While widening inequality has been prevailing since a very long time in India, despite the economic growth, the Government is of the view that protracted moderation in tax rate is also responsible for this gap, and it is time to rethink on this moderation, although it has been aided growth.

We believe that, the thought of having a debate on "inheritance tax", seems to have dawned because of lower tax-GDP ratio of our country. While India levies Wealth Tax too, the restrictive ambit has garnered meager collection therefrom. The Planning Commission panel has proposed to raise the tax-GDP ratio from projected 7.7% in the 11th Plan (2007-12) to 8.0% in 12th Plan (2012-17). Moreover, it wants to raise the ratio from estimated 7.2% in 2011-12 to 8.8% in 2016-17, terminal year of the 12th Plan. But we think to do achieve all this, instead of an "inheritance tax", a luxury tax would do more good, if the Government indeed wants to reduce inequalities. The present tax regime is stable (along with fair dispute settlement machinery) and is conducive enough to promote economic growth.

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sssibia43@yahoo.com Nov 16, 2012 imposing inheritance tax is too bad. this may result people below BPL paying tax. Luxury tax should be imposed. Avoidable perks to the politicians be cut completely.  To save money of security All MPs, Ministers ,MLA etc ( any one who is provided Govt security) should be allotted flats be fitting there status. There should pay commission to fix pay and allowances of the Ministers. MPs and MLAs. All pay and allowances be linked to BPL amount.

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