In U-turn, Chidambaram hints at higher tax for uber rich

The government should consider charging the very rich more tax, finance minister P Chidambaram said in an interview with a news channel aired today, but emphasised that he believed in "stable tax rates."

"We should consider the argument whether the very rich should be asked to pay a little more on some occasions," Chidambaram said.

His statements today seem in contrast to his statement before investors in Hong Kong on Tuesday that there would be no hike in taxes in this year's union Budget, and the government would seek other ways to raise revenue (See: No new taxes, Chidambaram tells foreign investors).

His comments come in the lead up to his 2013-14 Budget, due to be presented to Parliament on 28February.

Prime Minister Manmohan Singh's economic advisor C Rangarajan suggested last month that government could consider either raising the tax rates or imposing a surcharge on income tax paid by the super-rich.

The government is under pressure to raise more taxes to contain the widening fiscal deficit and to fund welfare programmes following a fall in tax collections due to slowing economic growth - seen slipping to a decade-low level this fiscal year ending in March.

Chidambaram did not say who should be included in this category and nor did he say whether he would support such a move. Currently, the top tax rate of 30 per cent applies to taxable income above Rs10 lakh.