Economist Abhijit Banerjee, the brain behind Congress’ NYAY scheme has admitted that the taxes on middle class would be increased to fund the scheme. In an interview with Rahul Shivshankar of Times Now he categorically said, “No NYAY without tax increase.” In another interview with Rajeev Dubey of Business Today he said that there is scope for direct as well as indirect tax increase. When Banerjee was asked what taxes should increase and what are the new taxes that can be imposed, he said, “Income taxes. In principle, there’s scope for wealth taxation and in some sense there’s scope for increasing GST.”
Therefore, it is very clear that if Congress comes to power riding on poll plank of Quasi Universal Basic Income (QUBI) the burden on middle-class will increase. The party would not only increase the Income-tax but the taxes on Goods and Services would also be increased. The party might introduce a new wealth tax (the tax levied on personal assets including bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities, and personal trusts) to finance NYAY scheme.
Banerjee was very specific that the middle class will have to take the burden of the scheme. “As we get middle income, we have to say that the middle classes have to be able to pay something,” said Banerjee. He even blamed the middle class of India of being reluctant to pay the taxes for the welfare of the poor. “There’s this idea that the middle class wants something without paying for it,” he added. He also admitted that after the implementation of NYAY scheme, subsidies will be removed. In fact, that would be first step to source the money for the scheme. “We’re going to try to replace a lot of the distorting subsidies by non-distorting subsidy. That’s the first step,” said Banerjee.
The left-wing economists across the globe rallied around Congress’s NYAY scheme. Banerjee is the co-founder of the Abdul Latif Jameel Poverty Action Lab along with wife Esther Duflo and Sendhil Mullainathan. Banerjee wants to influence the policymaking in India and he reached Delhi to launch his new book ‘What the Economy Needs Now’ which is written along with 13 other economists. He released the book on the verge of the general election in India to set the agenda for campaigning and policymaking.
The World Inequality Lab, an institution based in Paris School of Economics is also providing the intellectual support for the implementation of the scheme to Congress party. French economist, Thomas Piketty who has been popularly called ‘Karl Marx of twenty-first century’ is among the directors of World Inequality Lab. Piketty is known for recommending ‘revolutionary’ measures to reduce inequality. He recommended that the state should rob the middle class to finance the welfare scheme for poor people. He recommends a top income tax rate of 80% and a next-to-top income tax rate of 50 to 60% to increase the tax to GDP ratio. The Lab has proposed four measures through which the scheme could be financed.
Congress has been reluctant to admit that the scheme would be financed by raising the taxes on middle class. However after the interview of Banerjee, the brain behind the scheme it is very clear that the taxes on middle class would be increased exponentially to source the money for the scheme. The people associated with the other institution which is providing intellectual support for scheme (World Inequality Lab) have been supporter of income tax increase on middle class. So, there is not an iota of doubt that the burden of Congress’ scheme would fall on the shoulders of middle class.
