Jayant Sinha, Jaitley's new right hand at finmin, would like to tax inheritance wealth
While Jayant Sina is only a junior minister, he is a fervent believer in inter-generational equity. Translated, it means he favours a form of inheritance tax for wealth passed by the rich after their death to their progeny.<br />
Former external affairs minister Yashwant Sinha's son Jayant, the Hazaribagh MP from the BJP who also happens to be an alumnus of IIT-Delhi and Harvard, became a minister of state for finance in Narendra Modi's first cabinet expansion.
While he is only a junior minister, he is a fervent believer in inter-generational equity. Translated, it means he favours a form of inheritance tax for wealth passed by the rich after their death to their progeny.
Inheritance tax, referred to as estate duty in India, was scrapped in 1985 by the Rajiv Gandhi government. The then Fnance Minister, VP Singh, had argued that benefits from the tax were not as high as the cost of its administration. However, economists argue that this may have changed, as asset generation is much more today.
Moreover, the primary purpose of an inheritance tax is not always to generate revenues for the exchequer, but to ensure that inheritors do not have an unfair advantage have having access to unearned wealth.
The US, UK, Spain, Belgium, the Netherlands, Finland and Germany levy this tax.
At the Forbes India Philanthrophy Awards 2013, Sinha gave four reasons why India badly needs estate taxes and none of them were about shoring up revenues.
1. Having an estate tax in India will help in levelling the playing field and take away at least 50-55 percent of the advantage that dynastic business people already have right now.
2. It gets business owners to recognise that they are not going to own their businesses in perpetuity.
3. If you take money out of the estate tax net, it can be used to give back to society, i.e. philanthropy.
4. It will also help clean up India's political landscape
Watch the entire video here:
So while Sinha maybe all for taxing inherited wealth, it remains to be seen if finance minister Arun Jaitley and PM Narendra Modi will introduce the tax in the next budget.
Sinha's career has seen him work as an investment fund manager and management consultant (he worked as a partner at McKinsey at some point). He was elected to the Lok Sabha in May this year for the first time from Hazaribagh in Jharkhand, a constituency earlier represented by his father Yashwant Sinha. He was most recently a partner at the Omidyar Network, where he led their overall investment strategy and operations in India. He also spent many years as managing director at Courage Capital, a global special situations hedge.
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