Governments across the country are under severe financial stress due to the Corona Lockdown. The government of India had deferred a dearness allowance hike for Government employees and pensioners till July next year. The predicted Economic Slowdown for a year or so is giving sleepless nights to Modi Government.
Sources say that the Government sought suggestions to bridge the revenue gap and the suggestions indicate that it would mean the burdening of the Taxpayers further and more. Raising income tax rate to 40 percent for those who earn over Rs 1 crore a year, re-introduction of wealth tax, effecting a one-time Covid-19 cess of 4 percent on taxable income of over Rs 10 lakh are some of the ideas proposed.
The recommendations are part of a policy paper titled “Fiscal Options & Response to Covid-19 Epidemic (FORCE), which the IRS Association presented to the Prime Minister’s Office (PMO) and the Union Finance Ministry Saturday. The report said these additional taxations will allow the Government with direct cash transfer of up to Rs 5,000 a month for the poor, a three-year tax holiday for all corporates and businesses in the healthcare sector
The Taxpayers who are already shelling out huge money to the Government coffers will have a higher obligation towards ensuring the larger public good”. However, Economists say this is a stupid idea to burden the Tax Payers and the Government should actually lower the taxes and prompt more and more people to stay compliant. And that will widen the Tax net and fill the coffers.
