It is an idea that harkens to perhaps the worst aspects of India’s socialist past. The chairman of Indian Overseas Congress, Sam Pitroda’s comments on the inheritance tax, have raised the spectre of wealth redistribution, almost four decades after the very same Congress party under Prime Minister Rajiv Gandhi had abolished it. The then finance minister V P Singh had noted that the estate duty, or the inheritance tax as it was then called, had “not achieved the twin objectives with which it was introduced, namely, to reduce unequal distribution of wealth and assist the states in financing their development schemes.” Clarifications on Pitroda’s remarks by a string of party leaders do little to allay concerns. Especially given how, of late, Rahul Gandhi himself has been framing his party’s twin planks of social justice and economic welfare. Speaking at Hyderabad, he promised a financial and institutional survey to find out who holds the country’s wealth. He added that, “after this historic step, we will take revolutionary measures.” Read with Pitroda, there is an allusion to wealth redistribution.
Such talk is hare-brained, retrograde, and a classic self-goal. More so when the Congress itself had withstood pressure during the UPA’s term to reintroduce this tax. This not only turns the clock backwards, it also reveals an inability to learn from the past. Collections from the tax are likely to be a pittance considering state capacity and the myriad ingenious ways that are likely to be constructed to avoid paying the tax. In fact, this was even the case when the tax was in place. The then finance minister had acknowledged in his budget speech that collections from the tax were “only about Rs 20 crore” and its cost of administration was “relatively high”. Ironically, Pitroda’s pearls find no mention in the Congress party’s manifesto. In fact, the manifesto, on the issue of tax, makes some encouraging noises – for instance, it speaks about ushering in an era of “transparency, equity, clarity and impartial tax administration”, ensuring “stable personal income tax rates”, “lessen(ing) the burden of tax”, and eliminating “exploitative tax schemes”.
