Question 1 · 10 marks · 178 words written
Opening · a figure
Ans. World Inequality Report 2022, says top 10% holds 57% income while bottom 50% holds only 13% income. Thus it becomes important for govt to take measures to promote welfare state.
Body · points
Windfall tax is the taxation on sudden profit by a company/individual. It is to ensure that profits remain accountable.
Windfall tax can help redistribute wealth & promote economic equality -
1- Increase the revenue receipt of the government, which could be used in various welfare schemes like MGNREGA to provide employment 2- Promote social justice through schemes like Pradhan Mantri Anna Yojana 3- Promote Skill (PM Kaushal Vikas Yojana) - could engage youth in employment - economic welfare.
However, windfall tax has limitations
1- The share of tax to total income is lower 2- It could promote tax evasion, corruption or money laundering to prevent taxes. 3- Difficult to decide what sudden profit means - the income value limitations to decide tax.
Close · a way forward
Thus, an innovative step to reduce ginni coefficient and promote equality. Other steps like ease of doing business, helping small & Marginal farmers could help.