GD Topic: Surcharge on Income Tax (IT) for the Super-Rich

The Surcharge on Income Tax (IT) for the super- rich proposed during the Budget. What are the Pros and Cons? Let's discuss it as a GD topic.

By Aritro Dasgupta

This article was first published on July 24, 2019.

Attempting any topic in a Group Discussion (GD), requires a multi - faceted approach. One needs to approach any GD topic calmly, without getting too involved. In GDs, the most commonly posed topics are from current affairs. Whatever the GD topic, one needs stay away from controversial comments and opinions. In this series of articles, we explore certain trending GD topics which are quite likely to be asked in the GD rounds at the top MBA colleges this year. These are all based around topics of business, economy and society. We will set a path on how best to attempt these.

One such GD topic is regarding the pros and cons in the surcharge on Income Tax (IT) for the super - rich proposed during the budget. Like almost any other topic, this too can be answered in either For or Against motion. Let us explore each option:

GD Topic: Surcharge on Income Tax (IT) for the Super-Rich

For the Motion

This proposal may eventually be a grand success. There are several points in favour of the same as explained through the following bullet points:

1. It could lead to an equitable distribution of wealth. The excess money earned by a few will do well to be redistributed among the poor and those just above the poverty line. This could be executed through added funds to several pro-poor government schemes such as the Pradhan Mantri Awas Yojana, Atal Pension Yojana, Jan Dhan Yojana, Pradhan Mantri Ujjwala Yojana, Kaushal Vikas Yojana and several more.
2. Regional disparities can also be reduced. The vast number of the super-rich are concentrated in some of the biggest cities in India such as Mumbai, Delhi, Bengaluru, Kolkata, Chennai and Hyderabad. The super-rich incomes are in turn funneled for consumption of goods, leading to generation of indirect tax revenues that only end up benefitting those states. But if they are taxed at source, from their income and not spending, the revenues will be funneled to a single pool, from where national investments may be more strategic.
3. This will also reduce the surplus wealth that often gets earned in India, but unfortunately spent abroad. A lot of the super-rich spend a substantial part of their wealth, by flaunting it over international trips. This leads to those countries benefitting, at the cost of ordinary Indian citizens.
4. The increased tax collection could also reduce the dependence that social institutions, and implementing bodies have on third party contributions. At present, a number of social projects are fueled by funding from international philanthropic bodies, which are often unreliable, due to policy changes in their home countries.
5. Due to India’s mild progressive taxation system, individuals are always encouraged to earn as much as possible. With this change, the inherent greed in society could be plugged to some extent.

Against the Motion

While there are inherent pros to this proposal, there of course, also exist several cons. These are discussed below:

1. The greatest thing that separates humans from other animals, is the constant desire to do better. Money is one way, but it is ultimately reward for work done. The moment this is taken away, a lot of the ultra-motivated, genuinely hard-working, super-rich will no longer have the incentive to improve theirs and others’ lives.
2. Ultimately, it is often the super-rich who are generating employment and livelihoods for several other, often running in to millions. This could be directly through employment provision, or indirectly through producing unique products that support a massive support infrastructure. The top Bollywood stars for instance earn a lot, but their films end up employing a massive population across the chain.
3. The state-centre differences too could rise as a result of this. When taxed heavily at source, the super-rich will have lesser disposable income to spend at the local level. This could lead to lower indirect tax collection by the states, while the centre’s coffers fill up more, leading to tensions.
4. Excess taxation has been proven to be failure in the past in India. Indeed, the overall tax collection mechanism is much more robust in India now than earlier. Yet, excess taxation will encourage the super-rich, not to declare their wealth, or to under-report the same. They will instead try to funnel their excess incomes through a parallel economy, ultimately leading to lowered tax collection than even before the system is introduced.
5. Discouraging Indians from spending abroad could have ripple effects. It could lead to other countries not encouraging their citizens from visiting, investing or spending in India. The super- rich from other countries could soon be warded off spending nights at India’s luxurious palatial five- star properties, in case such a protectionist economic policy becomes a reality.

The main lesson we draw from the above points is that both viewpoints are perfectly fine, as long as the backing evidence is provided. Supporting examples need also to be drawn up. To prove one’s point, citing of data released by credible sources such as the World Bank, World Economic Forum (WEF), The Economist, Forbes, Fortune etc. is the best way of making one’s point. Indexes and ranks released by such bodies, present a highly credible and scientific justification for the points sought. The key is not to get too emotional. One does not earn brownie points for shouting the most. Instead, one has to work on the 4 Cs of Group Discussions- Content, Collaboration, Communications and Clarity.

About the Author:

Aritro Dasgupta is a Teacher, Trainer and Content Writer. He has taught at several leading colleges and coaching institutes in both India and the UAE. Several of his students have finished in the top 10 of various national level exams such as CLAT, AILET and DUJAT. He is also a prolific content writer, having written for several leading publications in India, while currently, also working for one in the USA.

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