Inequality is prevalent globally as revealed by the statistics, but tax is a tool that keeps it in check to foster fairness in the society, said Mr. Raman Kant Garg, Commissioner of Income Tax India (Exemption) at AIMA’s 62nd LeaderSpeak Session.
I would say that Inequality is a major social, political and economic disruptor. Globally, currently, there is a deep rethinking of taxation philosophies and their role in driving immediate economic growth, creating long-term economic capacity and achieving socio-political stability. The debate about balancing between driving growth through lower taxation and striving for equity through higher redistributive taxes is occupying the minds of most economists and policymakers. Since the early 90s, the taxation trend has been towards cutting corporate and personal income taxes to really encourage production and consumption.
And central to the idea of Inequality is “the issue of fairness”. Inequality is prevalent globally as revealed by some of the World Inequality Report 2022 statistics. The report says that the top 10% of the global population corners 52% of the global income. And the bottom 50% of the global population has access to only 81% of the global income. And as far as the Distribution Of Wealth is concerned, the topmost 10% population gets 66% of global wealth and not even 2% goes to the bottom 50% population.
In my opinion, this is how the issue of fairness comes to play as it impacts the common man who doesn’t have access to many facilities that the wealthy resort to. To throw more light on Inequality, I’d say that women were not allowed to vote until the 1920s. And the issue of Inequality was made more evident by the many invasions and revolutions that the world has witnessed in history. It was either to fight for the status of equality or revolt against the setup of inequality itself. There have also been revolutionaries like Karl Marx who have highlighted the cause with large-scale revolutions.
If we come to the modern age, there has been an evolvement of many things including information technology, start-ups, business models and more and this has provoked Inequality with a large number of people gaining wealth and some not at all. However, Tax is one such tool that keeps “Inequality in check” to foster fairness in society. Taxes also play a role in mobilising resources.
However, many consumption-friendly trade and taxation policies of the government have been helpful. Besides, India has really evolved in that area as today it is competitive globally owing to its taxation system due to the many reforms.
In conclusion, I’d say that the Income Tax structure is “moderate and sensible” now. However, the journey for its contribution of a GDP of 25% unlike other “rich countries” is a little long even if it’s the 5th Largest Economy. And as far as adhering to the global consensus like the US leading the cause for Global Tax on Trans National Corporation could be a welcome stand, as it could be beneficial to India.
Watch the full Session- https://www.youtube.com/watch?v=K-diBCtvVsI