View: Curbing the natural instinct of our entrepreneurs to create generational wealth is not a solution
wealth tax almost exceeded the income earned by an individual. The mindset was to levy very high rate of tax, and if anything was left after payment of these taxes that you wanted to inherit for future generations, the state would confiscate bulk of it by charging an estate duty.
The approach was socialist, and the expectation was that the higher collection of taxes would lead to redistribution of income and wealth to the poor.
Understandably, with a confiscatory tax regime of this nature, tax evasion was rampant, litigation all-pervasive, and wealth creation was elusive. The cost of tax administration for some of these taxes was found to be in excess of the taxes collected. Instead of disparity between the rich and poor decreasing, it only increased.
Mercifully, over a period of time, estate duty, gift tax and wealth tax were abolished — although gift tax, to a limited extent, has been reintroduced under the Income-Tax Act. Today, we have a moderate tax regime where taxes on individuals and corporates compare favourably with most regimes globally. Wealth tax was proposed under the Draft Direct Taxes Code, which did not see the light of the day. This has resulted in buoyancy of tax collection both on GST and direct tax fronts.
Tax collections have been exceeding government-budgeted revenues, and have been instrumental in fuelling expenditure on infrastructure growth. Our GDP is growing and is poised to continue to grow at the highest level among the large economies. We have some concerns regarding the FDI
