Rich must be prepared to be taxed more
New Delhi: Home Minister P Chidambaram, who as Finance Minister had slashed taxes, today suggested that rich should be taxed more even though "many people" would not like the idea.
"We must raise the tax revenue to defend (the expected aggregate decline of resources). I know many people won`t like this. But I think, I can summon the courage to make the statement," he said addressing a function of All India Management Association here.
Chidambaram as the Finance Minister between May 2004 and November 2008 had slashed taxes and was credited with presenting a `dream budget` in the initial years of his tenure in the Finance Ministry.
"I am (was) the Finance Minister who slashed your tax rates. Therefore you must be prepared to pay higher tax rates, especially the rich must be prepared to pay higher tax," he said.
The Home Minister said in Europe rich people were getting together to say, "please tax us more".
His suggestion is also in line with the move by US President Barack Obama who has proposed to tax rich for taking the American economy out of the financial troubles.
"Certainly this is not the place, nor I am the person to say what tax should be raised. But we should seriously consider how to raise the tax revenue of the country," Chidambaram said, even as preparations for the next Budget (2012-13) have started.
Chidambaram said that according to the Approach Paper (12th Plan), tax revenue is expected to rise from 7.4 per cent in the current year to 8.9 per cent next year and the non-tax revenue is expected to decline.
But, he said, "the worrying part" is aggregate resources, that include tax revune, non-tax revenue, non-debt capital revenue and borrowings, are expected to decline from 14 per cent in the current year (2011-12) to 13.11 per cent as a percentage of GDP.
The Home Minister said while the actual difference would be marginal because of larger Gross Domestic Product, as a percentage of GDP, aggregate resources would decline.