(Any opinions expressed here are those of the author and not of Reuters)
The countdown to Budget 2013 has begun, and Finance Minister P. Chidambaram must try to keep India’s fiscal deficit from gaining weight.
One idea we’re hearing a lot lately is turning to India’s super-rich citizens to boost tax revenue and improve the tax-to-GDP ratio. In a television interview aired in January, Chidambaram’s comments on the subject didn’t reveal much, but led to media speculation over higher taxes for the well heeled.
It’s a step that may lead the Harvard-educated lawyer down a path that John Morton took more than 500 years ago. The 15th-century lord chancellor in the court of the English King Henry VII, not to mention former archbishop of Canterbury, is traditionally credited with “Morton’s fork”, a taxation principle that ensnares the rich and poor alike.
It goes like this: frugal people must have enough money left over to give generously; people who live extravagantly must be prosperous enough to give generously too.
It’s too bad for Chidambaram that his name isn’t Morton. He will find it harder to get India’s millionaires to put their money to work for the good of the state.