More Stories

Informist, Friday, Dec. 13, 2024

 

NEW DELHI – Renowned French economist Thomas Piketty has called on the Indian government to publish data on the taxes paid by the country's billionaires, adding that the quality of tax data being now published by the government was worse than what it was 50 years ago.

 

"I have worked a lot with the income tabulations coming from many countries... It is quite a unique situation of India, which is a deterioration in the transparency and quality of information over time. Income tax tabulations that we have today...is less detailed than what we had in the 1960s and 1970s... If you don't publish data, how are we going to be able to improve the situation? I am all for discussing to improve our estimates, but please be more transparent about the working of the tax system in India," Piketty said on Friday in New Delhi at a panel discussion organised by the Delhi School of Economics and think-tank Research and Information System for Developing Countries.

 

Piketty, professor of economics and economic history at the School for Advanced Studies in the Social Sciences and the Paris School of Economics, is also the co-director of the World Inequality Lab and the World Inequality Database and has authored acclaimed books such as "Capital in the Twenty-First Century". In a paper earlier this year, he recommended that India impose an annual wealth and inheritance tax for those with net wealth exceeding INR 100 million. This, Piketty said, would raise "phenomenally large tax revenues while leaving 99.96% of the adults unaffected by the tax".

 

In the panel discussion on Friday, Piketty reiterated his suggestion while pointing out the scale of inequality in India when compared to other countries. However, his recommendations and assertions that inequality in India was high and rising were rejected by Chief Economic Adviser V. Anantha Nageswaran, Prime Minister's Economic Advisory Council member Shamika Ravi, and former Monetary Policy Committee member Ravindra Dholakia, who were all part of the panel discussion.

 

"In a lot of these debates, particularly when you are trying to project some of the European thinking onto an emerging market which is below $3,000 per capita per year, growth for us is non-negotiable... De-growth, which is the phenomenon right now in Europe for whatever objective, whether it's climate or social and wealth inequality, de-growth for us is almost immoral," Ravi said, while pointing out rising consumption levels, especially at lower income levels, as per recent government surveys.

 

Ravi also pushed back at Piketty comparing India with other countries, saying cross-country regression isn't good. Chief Economic Adviser Nageswaran too hit back, saying he was doubtful about international comparisons serving any purpose, calling them "superficially useful".

 

"In some areas it may be a good prod or nudge for action, but in some other areas it can be grossly misleading, especially when we don't take into account the starting points, history, the systems of governance, etc. So I think sometimes these comparisons can end up misleading and giving rise to wrong policy actions if we do not take the relevant context and history into account."

 

Piketty argued back, saying that while international and historical comparisons are very difficult, "we are very humble at the World Inequality Database and we take every constructive criticism, anybody who writes a paper to propose alternative estimates of income distribution. But I didn't see any that was proposed!"

 

"Whatever the imperfection of the data that we have, you will have to conclude that India is a very unequal country," he said.

 

Responding to comments by Ravindra Dholakia--currently a member of the Reserve Bank of India's Central Board of Directors--that the rich pay a significant share of income tax, Piketty said all the Indian government had to do was to release data on the taxes paid by billionaires.

 

"How much income tax was paid by the top billionaires over the past 10 years? If you take the top 100 richest individuals in India--I am not asking for names, but just give us the average for the top 100 richest taxpayers--from what I know, from all the data I have, the income that they report to the income tax system is 0.01% of their wealth. So you can increase your tax rate from 43% to 70% or 99%...but if the income that they report is a really small fraction of their wealth, that's not going to matter."

 

Responding to Piketty's issues with the quality of Indian tax data, Nageswaran said the government was working towards the same, arguing that the "incremental change with respect to data availability is in the right direction".

 

On taxing the super-rich, Nageswaran argued that while he may agree with Piketty, the problem was one of measurement and implementation.

 

"When it comes to the wealthy, they always have excuses or reasons not to pay their fair share. Whatever you say about global wealthy individuals, you should apply the same logic and yard-stick to global wealthy sovereigns as well." On the implementation front, the government's top economist also questioned the details of such a tax: "Who gets to keep the taxes, how is it going to be distributed? All these issues will come to the fore when you try to translate an idea into reality and execute".  End

 

US$1 = INR 84.79

 

Reported by Siddharth Upasani

Edited by Ashish Shirke

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.