Lord Meghnad Desai, the Indian-born, British labour party politician has made a strong case for abolishing Income Tax and instead made a strong case for a Consumption Tax.
“Income tax should be dispensed with as it does not yield much revenue and is in turn an obstacle to ease of doing business.”www.taxxcel.com
Lord Desai said in his address to students at the Meghnad Desai Academy of Economics. “Instead, the government should introduce a consumption tax, which would ensure that everyone is taxed.” The move he said would also ensure that savings are not taxed. Besides, a Consumption Tax will work more efficiently since it cannot be as manipulated as Income Tax he added.
However another panel member Ajit Ranade, group chief economist, Aditya Birla group countered that Consumption Tax tend to be regressive impinging more on the poor.
Lord Desai also made a case against fiscal stimulus. “In don’t think that an economy which is fastest growing in the world needs fiscal stimulus.”
The session essentially, a pre-budget discussion centred around what the budget proposals should be. “The government should look at new ways of raising revenues which are viable in the long run” said Lord Desai. ” If you want to feel good of the progress, you can tax wealth ( instead).”
However, the government has a lot of no-go areas when it comes to collecting revenues, he noted. Among others, there is a constitutional provision which says that the government cannot tax the agricultural sector.
He also made a case against fiscal stimulus. “In don’t think that an economy which is fastest growing in the world needs fiscal stimulus.”