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. “The Cent for Public Policy has lined up several more conversations in this series where we will address different kinds of inequality. The lower rate of corporate income tax as opposed to personal income tax results in individuals their activity to benefit from it. “Data shows that in many countries, the income disparity measured by the ratio of income of the top 10% population to that of the bottom 50% population comes down post taxation and transfers. NS former deputy governor of RBI and Senior Fellow at Bangalore, emphasized that it is important to understand the different dimensions of inequality in order to appreciate the of taxation policies followed in different parts of the world.

He explained that among the measures used to assess inequality are the ratio of the share of income of top 10% of population to that of the bottom 50% of population as well as the ratio of share of wealth held by top 10% of population as compared to that held by the bottom 50% of population. Need for progressive property tax and strong tax administration

In the second lecture in the series, ‘Inequality Conversations’, hosted by the for Public Policy at Bangalore, former deputy governor of RBI NS says taxation policies can alter income and wealth distribution to the benefit of those in the lower economic strata

7 FEBRUARY 2022: In his lecture this evening, on ‘Review of Taxation Policy’, delivered as part of the for Public Policy’s ‘Inequality Conversations’, Prof. “There is therefore a move towards global minimum tax implying that the home country of a multinational can tax profits from another jurisdiction to the extent of the difference between the corporate tax applied by the host jurisdiction and the minimum tax rate agreed upon. Also, the current global competitive corporate taxation enables large  to shift profits to low taxation jurisdictions. However, to reduce inequalities, there is a need to tax wealth on a progressive basis as opposed to a flat rate now applied in many jurisdictions. explained, that where the inequalities are severe in the poorer countries, it translates into sub-subsistence level living for a large section of the population.

He pointed out that taxation policies can alter income and wealth distribution to the benefit of those in the lower economic strata.

Globally, however, corporate income tax rates are moving southwards. The efficacy of such an arrangement is, to an extent, the function of the minimum global tax that is agreed upon,” he explained, adding that, for example, at a minimum tax rate of 15%, India could get an additional tax revenue of euro 0.5 billion and this would go up to euro 1.4 billion if the minimum tax rate is 25%.

“There is also the question of nations taking unilateral decisions like FAT by USA as opposed to a coordinated information sharing arrangement,” he observed, adding that FAT works because there is a punitive element for non-compliance. Analysis of how these measures pan out globally, between different regions of the world and different nations shows that while globally, inequality is undoubtedly very large, it varies from country to country and region to region with several countries and regions displaying steeper inequalities than the global average.

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Copyright © 2009-2022 Indian Institute of Management Bangalore. said one needs to work on increasing the tax to GDP ratio and raise the share of direct taxes. It should also be understood, Prof. “But one needs global economic clout for this.”

Moving to the Budget summary of 2022, Prof. 

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Indian Institute of Management Bangalore

Ministry of Education

The regressive impact of higher share of indirect taxes is addressed by directing public spending towards activities which result in greater economic welfare of those in the lower economic strata.

Among long term policy actions, he suggested

Convergence on a global minimum corporate tax to prevent race to the bottom

Progressive property taxes

Targeting a specified change in post-tax income distribution through fiscal policy

Strong tax administration.

In his introduction to the lecture, Professor M S Chairperson, for Public Policy at set the context for the series in the backdrop of the World Inequality Report 2022. Similarly, one needs to look at corporate taxation as opposed to just taxing wealthy individuals,” he said.

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