NEW DELHI: Chief economic adviser V Anantha Nageswaran on Friday cautioned against suggestions to impose "billionaire tax", arguing it may drive away capital from the country and impact investment.
"Effects of public policy are often asymmetric. Taxing capital less may not make them invest, but taxing capital more will drive away capital. It's easy to drive capital out, but it is a lot harder to bring back in" he said at an event. Govt's top economist also raised questions over some of the findings of the studies by economist Thomas Piketty and argued that India had managed to successfully bring a large number of people out of extreme poverty.
"Equality of access and opportunities matter more for public policy than equality of outcomes, relatively. Individual skills, attitudes and efforts matter," Nageswaran said, while warning that enforcing equality through regulation hurts small businesses as had been seen earlier.
He said that a part of Piketty's calculations was based on wealth created in stock markets, but recent evidence suggested that investments in shares had now extended extensively to smaller towns and cities. He also said that there was evidence to suggest that the gap between the top 20 companies and the others was coming down.
As Piketty pressed for levy on super-rich across the world and using taxes across countries to fight climate change, Nageswaran countered by saying there was no guarantee wealthy nations would part with the funds.
Shamika Ravi, member of the economic advisory council to PM, said that lower taxes had improved compliance, as was evident from the tax department statistics, and suggested that during the decades of high taxes in India there may have been greater evasion. She cited numbers to argue that extreme poverty was coming down and the latest statistics suggested that even the poorest households were consuming more milk, eggs and fruits and also owning vehicles. "Inequality of consumption is reducing," she added.
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