Super-rich people would go to tax-free nations like Dubai if inheritance taxes are implemented in India: Trader Gautam Sen

May 8, New Delhi, India: Author and political analyst Gautam Sen claims that the Ambanis and Adanis—two of India’s wealthiest families—will relocate their headquarters to Dubai in order to avoid paying taxes as a result of Congress’ plan to introduce a wealth tax.

 

He continued by saying that the richest people in India, including Ambani, Adani, and Tata, would probably leave for tax havens, which would cause India to lose a significant amount of money.

In an exclusive interview with ANI, Sen, a retired professor from the London School of Economics, senior consultant at UNDP, and former member of the Indo-UK Roundtable, shared his thoughts on the idea of enacting an inheritance tax in India. He drew comparisons with the US tax system and talked about the possible effects on the country’s economy and security.

“The Ambanis, Adanis, Mahindras, Tatas, and, I assume, no more than 500 of the very rich, the billionaire class, will emigrate from India to Dubai. These individuals are the very rich.” Since Dubai does not impose income taxes, the majority of Indian billionaires who have been fleeing the country—70% of them, in fact—have relocated there. Additionally, they’re going to re-register their companies in the United Arab Emirates, so India will only be able to collect corporate taxes from them as long as their company is based in India, according to Sen.

“There will be a significant loss of wealth for India,” he said. Now, when you consider other nations, Sweden once imposed a substantial inheritance tax. Furthermore, Sweden has historically had among of the highest tax rates in the world. You know, however, since so many wealthy people were leaving Sweden, the inheritance tax was repealed. For instance, the proprietor of IKEA left Sweden to immigrate.”

“And they discovered that when the inheritance tax was eliminated, a large portion of the money returned, economic growth increased, and tax collection also increased. They might thus transfer to Sweden’s less fortunate citizens using the additional taxes. Therefore, the average Swedish citizen benefited from the absence of wealth and inheritance taxes. The economist said, “Now, in India, you have to remember that you cannot do this to agricultural land if you cause this much chaos.”

Sen said that Sam Pitroda, a prominent member of Congress, was not using an appropriate parallel when he proposed that India implement an inheritance tax like to the one that exists in the US.

Sen said that all economies and societies experience redistribution, and that over the previous ten years, India has seen notable advancements in the wellbeing of its rural regions and the most impoverished segments of its population.

“There is absolutely no comparison between India and the US model. This is the problem. It is a fact that all economies and all communities experience redistribution. The redistribution that has taken place in India over the last ten years is really unprecedented in the previous thousand years. For the first time, rural India’s welfare has increased significantly. Furthermore, India’s poorest regions have seen improvements in their relative standing. In actuality, things are going great in India. The question is: How can one do this? It is not feasible to examine every home and company as suggested for a variety of reasons.”

Sen voiced doubts about the feasibility of enacting an inheritance tax and the Congress’s plan to poll every home and company.

He emphasized that trying to redistribute money from this segment would have little effect on the distribution of wealth overall since just a tiny portion of Indians pay personal income taxes.

Just 2.4%, or somewhat less, of Indians pay income tax. Personal tax is that. Of that group, I believe that just 1.2 million, or maybe a little bit more, have personal assets, the majority of which are located in their own homes. 77% of total family wealth is held in real estate, 7% is in gold, and 4% is in durable goods like fans, motorbikes, and cabinets. You need to examine everything and wrest it from them. If you want equality, put all these individuals out on the streets. However, in comparison to the rest of India, the overall amount of money you will make from this little number will be very, extremely modest.”

Sen cited the example of the inheritance tax in Sweden, pointing out that its repeal boosted economic expansion and preserved wealth.

In response to Congressman Rahul Gandhi’s proposal for a wealth redistribution, Sen states that it would be very difficult to put such a program into effect.

He clarified that taking assets from the richest people, who mostly invest in companies, would have a detrimental effect on small and medium-sized firms, which employ the majority of people outside of agriculture, and destabilize the economy.

“But practically all of this is invested in their businesses,” Sen said. Therefore, in order to seize their riches, you will need to liquidate their enterprises. Thus, the combined value of your neighborhood retailer, repair business, and shopkeeper will be at most Rs. 5 crore and maybe as much as Rs. 10 crore.”

“All of these people will have to surrender everything they own,” he said. The economy will now collapse. Even yet, keep in mind that small and medium-sized businesses employ the majority of people in India outside of agriculture. The government of India is attempting to address the major cash flow issue that these individuals face. They pay their bills in full and get their revenue later.”

“These individuals will truly be unable to work at all as they will attempt to extract as much as they can from their cash flow to satisfy the requirements of an inheritance tax. However, even it won’t be sufficient. My claim is that the 98, 99 percent of people who still lack basic necessities won’t be any better off after all the taxes you take away from those who make up less than 1.5% of the population. For the next six months, they will only endure suffering. And keep in mind that in order to determine how the wealth distribution is, you will need to do this poll every year or every two years,” Sen

Sen was skeptical that it would be possible for tax inspectors to visit every home and company, saying that it would be unfeasible.

He underlined that programs like infrastructure development, healthcare, and sanitation had significantly enhanced living standards in India, and he applauded the present government’s work in this area.

Sen said, “I don’t think this is going to happen. And I’ll say it again: in the last ten years, there has been better redistribution due to growth in real goods like building road networks, supplying water to people’s zones, providing them with toilets, providing health care, and offering them subsidized gas. UNICEF has already calculated that this improvement in people’s actual living standards comes out to about 4,000 rupees per household per month just from the toilet.”

He said, “Narendra Modi’s administration is devoted to enhancing the welfare of the underprivileged; his actions show that this is a top priority for both him and his government. Furthermore, it really hasn’t occurred in a millennium. This has never occurred throughout the decades after independence, the British era, or the Islamic period.”

“We cannot suddenly have a fifteen percent growth rate, therefore the advancement will always be sluggish. However, you will see a significant shift in the welfare of the impoverished in ten years if we manage to attain an 8 percent growth rate. the 25 crore people who, in the previous six or seven years, had already been brought out of poverty. Now, this is an accomplishment in which every Indian should take pride. Sen said, “We have to keep working toward this goal with even more sincerity, tenacity, and faith that this administration will not give up.”

In response to questions on wealth disparity, Dr. Sen said that although economic development may initially favor certain sectors more than others, inequality may nevertheless rise as a result.

The absolute well-being of the poorest has improved, he said, and there will eventually be a redistribution of relative earnings.

Sen highlighted, saying, “Those who are in the growing sectors of the economy always end up with the most growth.” However, this is a transient occurrence. They will wind up footing a considerably greater portion once it stabilizes. Some individuals benefit from the growing sectors during the early stages of expansion. However, keep in mind that the absolute state of poverty has decreased. Their proportion has decreased. But they have advanced in the absolute sense.”

“So this transient phenomenon will diminish over time,” he said. And growth will bring it about. The United States is a prime example of how the relative impact of expanding industries increases with more competition and economic opening up. Silicon Valley residents became much wealthier than the general population. In actuality, they surpassed the other wealthy industries, which was manufacturing, early.”

“The same thing is happening in India, but it’s a transient phenomenon,” he said. You have to accept this if you’re going to progress. I agree that it seems morally repugnant, but what you really need to consider is the absolute poverty line. And things have undoubtedly gotten better there. And that is our goal. Additionally, we want a leveling down of equity levels.”

Sen advised against enacting an inheritance tax, citing the possibility of societal unrest, political instability, and increased susceptibility to foreign military intervention.

Such drastic steps, he said, might spark opposition and discontent, opening doors for enemies like China to take advantage of India’s internal problems.

Sen said, “China’s complete hegemony over Asia is impeded by India.” The only other nation except Japan that poses a challenge to China is India, since China aspires to total domination across Asia. They now reside in a condominium in the US. Not even that is accepted by them. On a global scale, they would accept a condominium with the United States. However, they want to complete dominance in Asia. The only nation that is both large enough and maybe wealthy enough to withstand this is India. They will thus take action. Now that India is going through a transitional period, it is an excellent opportunity to launch an attack. Of course, they are aware that attacking India won’t be expensive. India is a very difficult military nut to crack.”

Sen was upbeat about the state of the Indian economy at the moment, pointing out that it is the world’s fastest-growing major economy and applauding the government’s infrastructure spending.

In order to maintain economic progress and prosperity throughout time, he underlined the need of continuity and stability in governmental policy.

Sen said, “The Indian economy is doing well. It is the world’s biggest economy with the quickest rate of growth. The economy will grow three times in 14 years if we can get 8%, which I believe is feasible. We are thus now at 3.8, 3.9, or perhaps a little bit higher. We’ll surpass 13 trillion US dollars. That is a remarkable amount of change in only 14 years.”

“However, I believe India will reach 7 trillion by 2031,” he said. In terms of history, this is quite amazing. We are very blessed. think our government is stable. As you can see, having a stable administration is crucial to wisely managing our resources as a country. that we possess. Whereas Atal Bihari Vajpayee lacked a majority, we have a stable administration.”

Sen called for sustained efforts to promote economic growth and stability, stressing the need to steer clear of measures that might impede India’s advancement.

He was optimistic about India’s economic future as long as there is stable and responsible administration.