Time for debate on inheritance tax: Finance Minister P Chidambaram

NEW DELHI: Finance minister P Chidambaram has called for a debate on the need for an inheritance tax in India, wondering if the country had paid enough attention to accumulation of wealth in the hands of a few.

Chidambaram was speaking at the Dr Raja J Chelliah Memorial Lecture organized by the National Institute of Public Finance and Policy (NIPFP) on Thursday.

"Have we paid little attention to accumulation of wealth in few hands? I am still hesitant to talk about inter-generational equity and therefore inheritance tax," FM asked, urging institutes such as NIPFP to debate the issue.

India levies a wealth tax but collections from it are meagre. In the current financial year the government hopes to collect 1,244 crore.

The lecture on 'The Growth-Equity Tradeoff in Tax Policy: Design: Evidence from a Large Panel of Countires' was delivered by Prof Jorge Martinez-Vazquez of Andrew School of Policy Studies, Georgia State University, Georgia.

He said that he was convinced that a stable tax regime, moderate tax rates, a non-adverserial tax administration and fair dispute settlement machinery is the best way to raise money for all that the government wants to do in terms of welfare and investments.

However, he wondered if time had come for a debate on if moderation had gone too far. "...sometimes I doubt whether we have taken moderation (in tax rates) too far," he said. "We should ask ourselves where moderation stops and when moderation becomes a passport to accumulation of wealth,"he said.