- PhonePe's Sameer Nigam highlighted that investment gains face lower taxes than earned income globally
- Nigam emphasized government intervention is needed due to distorted capital markets and rising inequality
- Kamath and Nigam discussed taxing inherited wealth above a threshold at 20% to reduce inequality
PhonePe's Sameer Nigam has questioned why investment gains should attract substantially lower taxes than earned income, arguing that a global economy in which money grows faster than wages or enterprise is driving inequality.
“Money makes money way faster than labour makes money or enterprise makes money,” Nigam said in a podcast with Nikhil Kamath. “And that's a global trend, which is why income disparities are out of whack.”
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Nigam said he believed in “old school American capitalism”, where someone could rise through enterprise within a lifetime, regardless of birth. But capital markets globally were now “extremely distorted”, he said, making government intervention more necessary.
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“So, role of government, ironically, in the democracies is in need much more than ever.”
The Inheritance Tax Argument
Kamath pointed to Australia and some Nordic countries, saying tax interventions had helped bring down inequality. He referred to the Gini coefficient, which measures inequality, before the conversation moved to property taxes, inheritance taxes and a progressive tax regime.
The exchange included a proposal to tax inherited wealth above a threshold: someone who earns money should be allowed to use it as they wish, but their children could pay 20% before inheriting an amount above a specified limit.
No threshold was specified in the discussion.
“Those are the changes we can ask for, because those are pragmatic,” Kamath said.
Nigam also questioned the favourable treatment of capital gains, rejecting the argument that higher taxes would deter private equity investment.
“Capital gains cannot be at a lower rate, just because it's private equity,” he said. “The argument has always been private equity people will not invest in the market.”
“Money will always get invested. Capital gains cannot be a fourth of income tax rates.”
‘You Can't Make It Higher'
Nigam, however, said countries could not ignore competing tax rates elsewhere. India risked losing capital if it raised taxes while other investment destinations kept theirs lower.
“You can't make it higher if the West and Singapore are lower,” he said.
Nigam expected the US to eventually lead changes in capital gains taxation, giving India and other countries room to follow. “If everyone gets there, everyone should agree,” he said.
The discussion later turned to government intervention in payments, with Nigam recalling PhonePe's request in 2018 for a separate category to protect small merchants from charges.
Before the government announced zero merchant discount rate, PhonePe had almost 30 million QR codes operating on person-to-person rails, he said.
Nigam cited exemptions for brokerage-related payments, mutual fund transfers and IPO transactions, arguing that charges and concessions needed to account for how money was being used.
He recalled objections to charging money transfers into brokerage accounts, where the subsequent trading activity would itself attract charges.
“You tax it when activity happens, you can't tax money transfer like that,” he said, recounting the objection.
Nigam also said retail UPI transaction growth had previously been higher, challenging the assumption that merchant charges would necessarily hurt adoption.
“Why are we shy about saying it?”
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