Dear young IRS officers, taxing the rich in Covid times is bad economics

The Narendra Modi government did well to promptly dismiss a proposal put up by a group of young Indian Revenue Service officers that recommended raising a number of taxes to make up for the government’s revenue shortfall amid higher spending requirements as a result of the Covid-19 pandemic. A prompt and public rejection of the proposal was warranted because even the whiff of an increase in taxes can deepen the crisis and prolong the recovery, because the already-mauled individuals and businesses will choose to play it safe by holding back on spending and investment.

That said, the government should not have gone further and taken disciplinary action against the intrepid officers. They were clearly acting in good faith. Barking up the wrong tree is not an offence and should not be penalised. A crisis is an especially important time for top leaders and civil servants to keep ears and minds open, and encourage fresh thinking within the government’s ranks.