What do you make of this inheritance tax and is it executable? Is it a sound economic idea?
Swaminathan Aiyar: No, I do not know that this is necessarily an issue about inheritance tax. There has been talk as far as I can see about a wealth tax, about taking a look around and doing a survey. All I can say is that the Congress Party has been a socialist party since 1947. The Constitution itself has a thing about distributing the common resources to benefit the common good. The Congress Party has always been for taxation of the rich to help the dalits, the poorer, minorities. The only thing is that the Congress has always done it in terms of class, rich versus poor. Modi is trying to convert it into a religion issue of Hindus versus Muslims.
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Now, while the Congress Party might surely like to do a review of the amount of wealth owned by the industrialist friends of Mr Modi, it is most certainly not going to be snatching the Mangalsutra from every Hindu to give to Muslims, that has never been on its agenda and you know, this is a twist being given to it. But the Congress is a socialist party. However, in the past, it has instituted a wealth tax, so little was being collected that Mr Jaitley in 2016 replaced it with a 2% income tax surcharge, which is probably collecting much more money than the wealth tax ever did.
So, yes, the Congress Party is for taxing the rich, but so is Mr Modi. Income tax rates have gone up under Mr Modi, they have not gone down. Therefore, there is common ground that it is necessary to tax the rich in order to benefit the poorer sections and the poorer sections include everybody, SC, ST, OBC, Muslims, Christians, anybody.
So, you say that the Congress is batting for a socialist idea, the fact that income inequality should be minimised. But let me also quote Mr Rahul Gandhi, who said just on the day the manifesto released that we will take up the historic assignment to distribute the wealth of India, jobs to the other sections of society and that really has led to a lot of backlash against the Congress Party and Mr Gandhi as well.
Swaminathan Aiyar: I would say people do not give Mr Gandhi a chance to win the election. So, there is no question of him coming to power and enacting all kinds of strong socialist measures. This is seen as one more promise. All I would say is that this is a party which under Indira Gandhi had raised income tax to 97.75%, wealth tax to 3.5%. When it did not work, they brought it down very substantially. So, while they have fiddled around with these ideas, they were in power from 2004 till 2014, that gives you a very clear idea of what kind of tax policy they had.
Yes, they always said that we will tax the rich in order to help the weaker sections. They always said it. But is there any reason to believe it would be much more stringent than in those 10 years? I see no reason.Are both BJP and Congress then only trying to consolidate their vote banks and will this debate then really swing voters?
Swaminathan Aiyar: I would say that this will not be taken too seriously. It is very well known that the BJP has been a Muslim basher, has accused the Congress of appeasing Muslims, constantly trying to say that these guys are minority appeasers. They want to give everything away to Muslims, to infiltrators, to people with more children. I mean, this is an old theme of BJP’s. At this particular point of time, a socialist idea of redistributing from rich to poor is being given a Hindu versus Muslim twist. This kind of misinterpretation, I regret to say, should not be taking place, although it does happen. When you see the Election Commission is pulling up somebody for a mere remark about Hema Malini, I think it should take action on, this is a much more serious defamation of what Manmohan Singh or the Congress manifesto intended to say.
When you say that this could be misinterpreted, is the problem then with the Congress and how it is choosing to communicate because you have Sam Pitroda butting in and saying that there should be an inheritance tax. Congress Party’s Rahul Gandhi said that we want to do a survey and divide income, taking from the rich to the poor. Then, Jairam Ramesh said that even Arun Jaitley praised inheritance taxes.
Swaminathan Aiyar: I think the Congress is very happy to be seen as taxing the rich to help the poor, but it is not going to go overboard. It has always been the theme of the party. It is, after all, a socialist party. It has always said we are for the weaker sections and it will obviously say that in the current things, it has been saying there are various industrialist friends of the BJP who have made an enormous amount of undeserved wealth.
They would certainly love to do an audit of those particular industrialists and say, can we find something and can we see whether that particular money is available to fund various redistribution schemes, whether it is in Awas Yojana or it is feeding or increase in pensions, all of these things could be funded if you can go after them. So, the theme of the Congress is that the BJP loves the suited, booted people, and we are going to take the money out of the suited, booted people and help the poor. So that, to some extent, I find a complete consistency in that.