Union Budget 2022-23: Subramanian Swamy has a bold suggestion on income tax for govt
Rajya Sabha MP and economist Subramanian Swamy has a bold suggestion for the government as Finance Minister Nirmala Sitharaman gets ready to announce the Union Budget 2022-23 on February 1.
In an exclusive interaction with Business Today, Subramanian Swamy suggested that income tax should be “abolished” from April 1 to boost economic growth, at least till the time the situation is back to normal.
When asked what he would have done had he been the finance minister, Swamy said, “Firstly, I would announce that effective from April 1, till we are back to normal, no income tax will be paid by anybody. And once normalcy comes, I think we should start making that permanent.”
Subramanian Swamy’s suggestion comes at a time when millions of households in the country have come under pressure due to rising inflation and rising medical costs in the wake of Covid-19.\
Justifying his suggestion, Swamy said there are other alternatives to raising revenue besides income tax. “I first suggested this in the beginning of our tenure as BJP government, we were getting revenue from income tax of around 4 lakh crore, which is nothing. You can look at the whole Budget, and it has now gone to perhaps 8-9 lakh crore," Swamy told BT.
He further said there is the option of raising resources from coal auctions, adding that “there is no shortage of alternative sources for the government to raise taxes”.
“And if the economy is booming, people are willing to pay taxes. Also, put a rule saying that income of companies which are reinvested will be exempt from taxes altogether. So, the savings rate will go up and, with this, growth rate will also go up,” Swamy explained.
Subramanian Swamy also said that he would reduce the interest rate on loans from the present prime lending rate to 12 per cent down to 9 per cent.
That's also within our hands; banks can do it and raise the fixed deposit interest rates from 6 per cent to 9 per cent. So that people save more,” he told BT.
Swamy highlighted that the amount of household savings in terms of GDP share has come down due to the prevailing economic pressure, arising from the pandemic and rising inflation. He said investments have also come down as a result.
He also highlighted that the economy has still not regained the level of growth seen in the fourth quarter of 2019-20, just before the global pandemic ravaged growth. While predictions and official data indicate strong growth for India in this financial year, Swamy said it will all depend on how the economy performs in the remaining quarters.
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