The Reserve Bank of India (RBI) questioned the fairness of the West Bengal Government’s proposal to levy additional tax on cigarettes to compensate the victims of Saradha chit fund scam.
RBI Governor D Subbarao said, “If people go back to Kolkata-based Saradha Group scheme, the Chief Minister said 'I will levy additional taxes on cigarettes and some other things to compensate the people who have lost money' ... Is it fair?”
The Governor was delivering a lecture to economics students to mark the Platinum Jubilee celebrations of Jammu & Kashmir Bank on Wednesday.
According to Subbarao, the basic principle of banking is that the people who put money in banks should also bear the risk. “Why should all of us support people who put their money in a bank? Do you recognise that the tax payers are compensating the people who invested their money in a bank,” he stressed.
Saradha scheme has cheated investors and collected millions of rupees through fraudulent money pooling scheme.
On April 25, West Bengal chief minister Mamata Banerjee had announced a special relief fund based on additional tax on tobacco, to partially compensate stricken investors. The chief minister had announced a Rs. 5 billion relief fund, of which Rs. 1.5 billion was to come from a 10% additional tax imposed on cigarettes.