Oxfam inequality report: Taxing the ‘obscenely’ wealthy may not be the right solution
(GS-III: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment)
Evidence of “excessive” wealth concentration and uneven income growth is mentioned in the recently released Oxfam “Survival of the Richest” report.
The gap in income recovery between the top income categories and those at the bottom as a result of the economic crisis post-COVID-19 pandemic.
India-specific findings in the report:
There are now 166 billionaires, up from 106 in 2020.
The top (30%) earners hold the majority (90%) of the wealth. This contrasts with the global figure, where it is believed that the richest 1% have amassed about two-thirds of all new wealth.
Ramifications of the above findings:
This can stir the debate for an equalising wealth tax (a progressive wealth tax where the tax rate increases as the wealth of an individual increase. The goal is to redistribute wealth and reduce inequality among citizens.)
Oxfam argues that indirect taxes are regressive and suggests –
Tax collection depends upon The mix of taxes that a country raises as a function of its institutional capacity, the structure of the tax base and the desire for simplification.
Case of India – The report raises two important points:
The lower corporate tax rate in lieu of incentives and the introduction of GST – a costly experiment of tax policy in India.
The corporate tax cuts brought the statutory tax rate down from 30 to 25.17%, leading to a revenue loss of Rs 1.03 lakh crore.
The GST and its disproportionate impact on the lowest earners.
Oxfam uses NSS 2011-12 to establish that the bottom 50% pays six times more indirect tax as compared to the top 10%.
The current income tax system exempts incomes up to Rs 5 lakh from tax and the GST rate structure places a higher burden on luxuries.
Issues with the Oxfam report’s calculation:
Although the report carries the right message about rising inequalities and the need for tax reform, it gets lost in assumptions.
For example, India will gain 10% more in taxes than it currently collects indirect taxes from the introduction of the wealth tax.
A wealth tax has historically been utilised by nations, including India, but the revenues were dismal, making it an expensive tax to operate.
Hence, a compartmentalised approach to tax policy that links several taxes that are levied against the same base is meaningless.
Taxes do not always solve problems, and it is important to consider the impact of other macroeconomic measures like low-interest rates and regulatory actions.
Rather than depending on a tax that depends heavily on volatile asset values, the same goal can be achieved with a gradual increase in wealth and income of all. This will reduce inequalities without penalising the corporates.
5 billion people globally are exposed to toxic trans-fat linked to heart disease
(GS-III: Issues related to health)
Five billion people globally are exposed to harmful trans-fat, increasing their heart disease and death risk, according to a new report “Countdown to 2023” by the World Health Organization (WHO).
The report monitors global progress towards the 2023 target for the global elimination of industrially produced Trans-Fatty Acids (TFA).
TFAs are unsaturated fatty acids that are of two types –
Naturally occurring trans-fat occurs in some dairy and meat products.
Industrially produced trans-fat adds hydrogen to liquid vegetable oils to make them more soli It is found in packaged foods, baked goods, cooking oils and spreads.
Key Findings from the report:
Trans fat intake is accountable for up to 500,000 early deaths from coronary heart disease annually.
Nine countries — Australia, Azerbaijan, Bhutan, Ecuador, Egypt, Iran, Nepal, Pakistan and the Republic of Korea — of the 16 nations with the highest estimated percentage of coronary heart disease fatalities attributed to trans-fat consumption do not currently have best-practices strategy.
Two best-practices policy options:
Mandatory national limit of two grams of industrially produced trans-fat per 100 grams of total fat in all foods;
Mandatory national ban on the production or use of partially hydrogenated oils (a major source of trans fat) as an ingredient in all foods.
Harmful effects of TFA:
TFAs pose a higher risk of heart disease than saturated fats – they raise total cholesterol levels, and reduce the good cholesterol (HDL), which helps to protect one against heart disease.
It is also associated with a higher risk of developing obesity, type 2 diabetes, metabolic syndrome, insulin resistance, infertility, and certain types of cancersand can also lead to compromised fetal development causing harm to the yet-to-be-born baby.
Steps taken to regulate TFA:
FSSAI launched a “Trans Fat-Free” logo for voluntary labelling to promote TFA-free products in shops for preparations containing TFA not exceeding 0.2 per 100 g/ml.
Campaign “Heart Attack Rewind” to eliminate industrially-produced trans-fat in the food supply by the year 2022.
FSSAI limits the content to not more than 2% by mass of total oils and fats from January 2022.
Swasth Bharat Yatra, an initiative started under the “Eat Right” campaign is a Pan-India cyclothon to engage citizens on issues of food safety, combating food adulteration and healthy diets.
TFA REPLACE strategy by WHO.
Architect BV Doshi (1927-2023) passes away
Renowned architect of post-Independent India, Balkrishna Doshi died on January 24 at his residence in Ahmedabad.
To the evolution of architecture:
Infrastructure projects: Designer of IIM Bangalore, IIM Udaipur, NIFT Delhi, Amdavad ni Gufa, CEPT University, NIFT Delhi and the Aranya Low-Cost Housing development in Indore which was awarded the Aga Khan Award for Architecture.
Ethical lessons from his life:
About Pritzker Architecture Prize (regarded Nobel Prize for Architecture):
The Pritzker Architecture Prize (est. 1979) is an international architecture award presented annually “to honour a living architect or architects whose built work demonstrates a combination of those qualities of talent, vision and commitment.