Asserting that there was need to increase tax revenue because of the expected decline of resources, Home Minister P Chidambaram said the rich must be taxed more although he admitted many people would not agree to the idea.
Though the home minister conceded it was not his job to suggest how tax should be raised, he pointed out the process for the preparations of the next Budget for 2012-13 had started and the Union government should seriously consider ways to raise the tax revenue of the country.
“We must raise the tax revenue to defend the expected decline of resources. I know many people won’t like this. But I think, I can summon the courage to make the statement. I was the finance minister who slashed your tax rates. Therefore, you must be prepared to pay higher tax rates, especially the rich must be prepared to pay higher tax,” said P Chidambaram while addressing a gathering of the All India Management Association.
Interestingly, although Chidambaram advocated an increase in taxes, during his tenure as the finance minister between May 2004 and November 2008, he had slashed taxes. Chidambaram said that according to the approach paper to the 12th plan, tax revenue is expected to rise from 7.4 per cent in the current year to 8.9 per cent next year and the non-tax revenue was expected to decline.
“The worrying part is that aggregate resources, that include tax revenue, non-tax revenue, non-debt capital revenue and borrowings, are expected to decline from 14 per cent in the current year 2011-12 to 13.11 percent as a percentage of GDP,” Chidambaram added.
