Low taxation rates and no exemptions are what the economy needs now and forever. The withdrawal of all tax exemptions would improve capital allocation, and the productivity of savings and investments in India, says Gopalan Ramachandran, Financial Analyst, Business Economics and Risk Management, Chennai.
Since
Independence, almost all citizens of India have lived
lives that served the establishment, the expansion and
the maintenance of the Government and its numerous
components. Private citizens households and businesses
have been viewed as sources of funds for establishing,
expanding and maintaining government in a one-way
relationship. This has placed no requirements on the
government and its numerous components to deliver,
anything of substance and value to households and
businesses.
Within
the one-way relationship, taxes, taxation policies,
and tax laws have been designed, developed and used so
that funds from households and businesses will somehow
flow to the government. The morale of households and
businesses had to be maintained in a state of minimum
health towards this very important purpose. The
Government understood that households and businesses
would shy away from cash-producing economic activity
if their morale were not maintained in a state of
minimum health. The language of equitable distribution
of incomes, economic development, tax exemptions aimed
at economic development, tax sops aimed at stimulating
savings and investment, and disincentives aimed at
suppressing demand and consumption, were used to
maintain the morale of society.
|
