In order to deal with the issue of accumulation of wealth, Finance Minister P Chidambaram on Thursday said the time has come for a debate on imposition of inheritance tax.
"Sometimes I doubt whether we have taken moderation (in tax rates) too far. 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. I think these are the questions we should debate", he said, while addressing a National Institute for Public Finance and Policy (NIPFP) function.
Noting that moderate tax regime of the past 15 years has promoted growth and equity, the Minister said: "We should ask ourselves where moderation stops and when moderation becomes a passport to accumulation of wealth and therefore greater inequality. I leave you with these question."
Stable tax regime with moderate rates and just dispute settlement machinery, he admitted, was the best way to raise revenue for welfare and investments.
"Given our initial conditions, the policy design in the Indian case is focused on sustainable principle that yield high growth and thereby fund government inclusive growth agenda," he said.
Chidambaram said the successive governments in India would continue to tread on the reform path in fiscal policies. They would carry forward the reforms in fiscal policies in line with emerging economic frontiers.
Speaking on the occasion, Prime Minister's Economic Advisory Council Chairman C Rangarajan said: "Many people think that growing inequality has come in way of faster recovery... Growth and inequality are major concern of policy making not only in India but all across the world."