The Gist of Yojana: January 2017
- Tax Reforms: Past, Present and Future (Free Available)
- HIMANSH, India’s Remote, High- Altitude Station (Only For The Subscribed Members)
- India's Tax System: Increasing Progressivity (Only For The Subscribed Members)
- Ushering in a New Era of Tax Reforms (Only For The Subscribed Members)
Tax Reforms: Past, Present and Future
Tax reforms are an integral part of the development process of any country. Eve n developed countries such as the United Kingdom and the United States, which are often the role models for developing countries such as India, too undertook reforms in the last few years.
Take the United Kingdom. The Conservative Liberal Democrat coalition government undertook reforms between 2010 and 2015. In the reforms initiated in 2013, two million people were virtually removed from paying income tax altogether when the Chancellor of the Exchequer presented the budget. The raft of reforms brought about a rise in the personal allowance, which meant that no one paid any tax until he or she earned more than £9,440. The threshold for the higher rate of tax - above which people pay tax at 40 per cent - dropped from £34,370 to £32,010, excluding the personal allowance.
At the same time the top rate of income tax fell in 2013-14 from 50 per cent to 45 per cent for those whose taxable income exceeded £150,000.
Take a country like the United States. A symbol of free trade and an advanced economy, it is a country that needs tax reforms very badly.
Realising this, two legislators are trying to deliver a broad tax reform. Max Baucus, the Democrat who heads the Senate's tax-writing committee, and D.ave Camp, his Republican counterpart in the House of Representatives, have been at the exercise for the last three years; they have been talking to people and floating ideas. Though any full plan is yet to fructify, their principles are sound: lower tax rates for both corporations and individuals, paid for by limiting or scrapping tax breaks.