Mumbai: Citing religious texts, a Hindu ideologue on Friday said 16 percent is the ideal level of taxation and warned the government that people and businesses will leave if they are forced to pay more in levies.
He said our ancestors were "intelligent and smart" and it was policies like considerate taxation that ensured that we commanded as much as 33 percent of the world trade and GDP some time in history.
Remarks by Swami Vigyanand, chairman of the World Hindu Foundation, come at a time when government has increased tax on high earners to as high as 42 percent and also sharply cut corporate tax last week to spur sagging growth.
"Those doing hard work, if they are taxed more, will leave the country. In this globalised and liberalised world, you only attract character and talent, you cannot control them," he told the fourth World Hindu Economic Forum.
Quoting religious texts, he said a state should take only one-sixth or about 16 percent as income tax, and recalled that our ancestors were intelligent and smart on this front. It was due to policies like these that India could control one-third of the global trade and GDP as against the under-2 percent now, he said.
"Businessmen who tirelessly make efforts to do business should not be made to pay heavy taxes," he said, and welcomed the move to lower corporate tax to 25.17 percent.
He, however, did not speak about personal income tax.The state should take into account factors like technology and investments on it, cost of production, quality of product and profits before setting a taxation rate, the IIT Kharagpur alumnus said, adding survival of the businessman is the most essential.