Chidambaram looks at increasing taxes on the rich

Tags: Economy
The government should consider higher taxes for the "very rich", Finance Minister P. Chidambaram said in comments that could worry India's tycoons, many of whom say such a move would stifle entrepreneurship in Asia's third-largest economy.

The government is under pressure to raise more taxes to contain the widening fiscal deficit and to fund welfare programmes following a fall in tax collections due to slowing economic growth - seen slipping to a decade-low level this fiscal year ending in March.

"We should consider the argument whether the very rich should be asked to pay a little more on some occasions," Chidambaram told CNBC TV 18 news channel in an interview aired on Thursday.

Chidambaram did not say who should be included in this category and nor did he say whether he would support such a move. Currently, the top tax rate of 30 percent applies to taxable income above 1 million rupees.

The finance minister also said he believed in "stable tax rates" but he did not rule out future changes to tax rules.

There has been growing debate on the issue of increasing taxes on the wealthy ahead of the 2013/14 budget, which Chidambaram is due to present to parliament on February 28.

Prime Minister Manmohan Singh's economic advisor C. Rangarajan suggested last month that government could consider either raising the tax rates or imposing a surcharge on income tax paid by the super rich.

Azim Premji, chairman of India's third-largest software exporter Wipro, said at a gathering of business leaders in Davos on Wednesday that he was not against higher taxes for the wealthy in principle.

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