Amid the coronavirus outbreak, we are all aware that the several businesses have been severely hit with many even shutting down. And not to forget the plight of scores of migrant workers who have lost their jobs amid all the businesses being closed.
Yes, it is important for the government to take necessary steps to revive the economy at the moment along with ensuring that the virus is completely contained. Ofcourse, to revive the economy, businesses need to start operating again but it is important to keep in mind the spread of the virus in various states like Maharashtra, Delhi, etc where businesses are carried out on a large scale. But considering the increase in number of cases in these states, it looks like the restrictions won't be relaxed soon.
In a policy paper-cum- recommendation titled "Fiscal Options and Response to COVID-19 Epidemic (FORCE)" presented to the PMO and Finance Ministry, the IRS officers have said that the Government needs to spend considerably more to revive the economy; and b) it needs to raise additional revenue, but in ways that must not burden the already distressed common man.
"Most high-income earners still have the luxury of working from home, and the wealthy can fall back upon their wealth to cope with the temporary shock. In view of several European economists, taxing the wealthy would be the most 'progressive fiscal tool', as wealth is far more concentrated than income and consumption," it said.
From raising the income tax rate to 40% for those who earn more than Rs 1 crore a year, imposing COVID-19 cess of 4% on taxable income over Rs 10 lakh, re-introduction of wealth tax, to direct cash transfer of up to Rs 5,000 per month to the poor- these were some bizarre recommendations made by 50 'young' IRS officers to the Modi government in order to the revive the economy which has been hit by the coronavirus pandemic.
How did experts react to the recommendations?
Well, rightly so, these recommendations did not go quite well with experts in the industry and they went on to slam the IRS officers.
Harsh Madhusudan, an investor, said on Twitter, "From yet another income tax hike to reintroduction of wealth tax as well as inheritance tax all ideas are included here. Remember how dividend tax cut by the government became an increase. And how LTCG was brought back while STT was kept. On personal taxation, very harmful steps."
Experts even questioned that "how does it make sense to tax people more when they are already paying a huge amount of taxes?"
What does Finance Ministry have to say?
Hours after IRS officers submitted their bizarre recommendations, a media note that quotes Finance Ministry ‘sources’ surfaced online.
The press note called the IRS officers suggestions an "act of indiscipline and violation of conduct rules", since the officers are not supposed to go to the media with their personal views and opinions.
"Fin Min sources said that neither IRS Association nor any group of officers mentioned in the said report were ever asked by the Government to give any report on the subject. In fact, it was not even part of their duty to prepare such a report," the media note states.
It also adds that the CBDT's Chairman has been directed to seek an explanation from the officers who had put forward the suggestion.
IRS Association distances itself from the recommendation paper
Later, even the IRS association said the views of the 50 young IRS officers does not reflect the organisation's views.
"The paper FORCE by 50 young IRS officers suggesting policy measures had been forwarded by IRSA to CBDT for consideration. It does not purport to represent the official views of the entire IRS, or the IT Dept," said the association on Twitter.
Income Tax department says they never asked for the recommendations
Now, the Income Tax Department has taken to Twitter to clarify that it never sought such a report from either the IRS Association or these officers.
"There is some report circulating on social media regarding suggestions by a few IRS officers on tackling Covid-19 situation. It is unequivocally stated that CBDT never asked IRS Association or these officers to prepare such a report," it wrote.
Income Tax department further added that no permission was sought by the officers before going public with their personal views and suggestions, which is a violation of extant Conduct Rules. Necessary inquiry is being initiated in this matter, it said.
Further, it is reiterated that the impugned report does not reflect the official views of CBDT/MInistry of Finance in any manner.
