TAXES IN INDIA

IN INDIA, RICH PEOPLE SHOULD PAY MORE TAXES THAN THEY DO: JEFFREY SACHS

Indivjal Dhasmana

Business Standard, October 20, 2012

Jeffrey Sachs, director of The Earth Institute at Columbia University, and also special adviser to the United Nations Secretary General on the Millennium Development Goals (MDG), says India needs to raise its tax revenues substantially, for public spending. In New Delhi to take part in the OECD World Forum, he tells Indivjal Dhasmana the political system in the US and India needs big change and why he favours nuclear energy. Edited interview:

During the financial crisis, you said India needed to raise its public spending. Growth is slowing here and the fiscal deficit is high. What is your advice to India now?

The total tax share in India’s GDP is under 20 per cent. India certainly needs more revenues than this for public investments and public services. First, it should tighten enforcement of tax laws on companies and wealthy individuals. Over time, the tax system should be oriented to raise revenues to, say, 25 per cent and then to 30 per cent of GDP. In Europe, it is 40-50 per cent of GDP. In the US it is about 31 per cent, too low for our needs.

Are you proposing some additional tax on the super-rich in India, as Warren Buffett had proposed for the US?

In general, rich people should pay more taxes than they do. We have also created a shocking system of tax evasion through tax havens like Mauritius, Hong Kong, the Cayman Islands and the Jersey Islands. The world tolerates this but it is really a measure of political corruption everywhere.

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