Growing wealth inequalities and shrinking opportunities for the youths are the harsh realities of India. But the imposition of inheritance tax will turn out to be a cure worse than the disease. The idea of taxing inherited wealth has triggered a political furore in the ongoing election campaign for the Lok Sabha elections. This was probably the first time that a taxation issue has become a polarising theme in electioneering, with both the BJP and the Congress accusing each other of reviving the controversial idea. It is rather surprising that inheritance tax should engage political attention in a developing nation like India which is in the middle of healthy economic growth.
Chairman of the Indian Overseas Congress, Sam Pitroda’s remarks in favour of a US-style tax policy for inherited wealth sparked the controversy. While the Congress has quickly dissociated itself from the observations, treating them as his personal views, Prime Minister Narendra Modi and his party colleagues latched on to the issue to project the grand old party as a villain out to snatch the wealth of people even after their death. This has only added fuel to the fire on the controversial Congress’ promise of redistribution of wealth in the country. The prime minister himself has given it a malicious touch by alleging that the Congress is planning to redistribute citizens’ wealth among Muslims.
Though economic inequality is a major concern for India, it needs to be addressed with varied mechanisms, such as wider access to education and skill development, easy access to finance for a wider entrepreneurial class, infrastructure development, removing supply chain bottlenecks, agricultural and land reforms, and rural job creation.