Union Budget Highlights Widening Gap Between Individual and Corporate Tax Contributions  

Paromita Das

GG News Bureau

New Delhi, 25^th July. The Union Budget for this year has once again underscored the widening gap between the tax contributions of individual income taxpayers and corporations. This disparity, primarily due to the corporate tax cuts introduced five years ago, has resulted in individuals shouldering a disproportionate share of the tax burden.

The Corporate Tax Cut and Its Aftermath

In 2019, the government cut business tax rates from 30% to 22%. The goal was clear: to promote private investment and job development. However, the tax cut resulted in an annual revenue loss of Rs 1.45 lakh crore. Over the last five years, the total revenue lost amounts to a whopping Rs 8.7 lakh crore. The projected economic gains, such as greater investment and job development, have not occurred as planned. Instead, the corporate sector has mainly absorbed these savings, either holding them or dispersing them as dividends, resulting in a stock market spike that is divorced from the broader economic realities that the general public faces.

Disproportionate Tax Burden on Individuals

The current budget reveals a troubling trend: individual income tax currently accounts for 19% of government revenue, while corporate tax provides only 17%. This move suggests a large increase in the tax burden on individuals. Income taxes have risen from Rs 2.5 lakh crore in 2014-15 to Rs 11.8 lakh crore in the most recent budget estimates. Corporate taxes, on the other hand, have grown at a considerably slower rate, rising from Rs 4.28 lakh crore to Rs 10.2 lakh crore during the same time period.

Income Inequality and Economic Disparity

The data reveals a growing income inequality in Bharat. According to the World Inequality Lab, income and wealth concentration among the top 1% in Bharat has reached historic highs, with the top 1% holding 22.6% of income and 40.1% of wealth as of 2022-23. This starkly highlights that the benefits of economic policies over the past decade have disproportionately favored the wealthy, exacerbating the income divide.

Bharat is currently grappling with the implications of K-shaped growth, where the wealthy experience substantial gains while the majority of the population struggles with stagnant or declining incomes. This growing economic disparity raises critical questions about the effectiveness of current fiscal policies and their impact on social equity and economic stability.

Conclusion

The Union Budget has brought to light the pressing issue of tax disparity and growing income inequality in Bharat. As the burden on individual taxpayers continues to rise, and the benefits of corporate tax cuts remain elusive, it becomes imperative for policymakers to reassess and recalibrate fiscal strategies. Ensuring a more balanced and equitable tax system is crucial for sustainable economic growth and social cohesion.