You can put your views...
How does one correct disparities?
Submitted by Arthakranti on Tue, 12/07/2010 - 09:32
You can put your views...
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How does one correct disparities?Submitted by Arthakranti on Tue, 12/07/2010 - 09:32 You can put your views... |
Monetary Disparities and TT
Shri Anil Bokil has responded with the following reasoning ...
In the proposed Tax System, Cash transaction are not attracting any tax. Lower strata of society which can complete all their transactions in cash ( smaller denomination notes of Rs 50 and lower), will not have to pay any tax, whereas high income individuals handling high value transactions will have to go through banking system on which Transaction Tax will be levied. Lower the Bank transactions ( by middle Class) lower will be the tax. Thus, disparity will be corrected over a short period of time.
With substantial increase in Govt. Revenue ( Through Transaction Tax )
it will be in better position to absorb inflationary effects through exteneding Social Security norms to affected strata of society ( refer Social Security Proposal on wwww.arthakranti.org.)"
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I wish to put the following points for discussion ...
I will address 'disparity' in the lowest of low class of citizens, who are probably about 10% of the population and are therefore open to exploitation by Naxals, organized crime, etc. Low value spends will occur not only from the poor but also from the rich; since certain products and services are low value, cutting across class. One can still get a plain lunch under Rs. 50 anywhere in India. The new marketing thrusts have now provided semi-luxury items in sachets and 'value packs' at under Rs. 10. Yes, the rich will also spend on costlier products and service and as per the proposed TT plan, these will attract TT which the poor will not be exposed to (they do not relate to these things anyway). This situation is more or less as per current taxation policy, where the poor have no access to cash and survive on hand outs of products, this in spite of a minimum wage policy. The poor are often paid in kind ... two Kg of rice, etc. This is reality.
The last two years of social spends, National Employment Scheme, loan wavers, have put cash in the hands of the same poor who are now spending on 'costlier goods' for which the proposed TT plan will have TT. Disparity does not go away, only begging for newer Govt. 'hand outs' increases. Leakages also increase due to such Govt. spending where monitoring and implementation is sabotaged.
Govt revenue is increased by increasing the level of TT or current taxes (in their various forms), in any case. This will not be a new method. Currently, tax on roads, education, city facilities, airport, parks, etc are proposed and also implemented.
Disparities will reduce when the lower classes have better employable skill sets, better infrastructure to market their products and skills, law enforcement without delay or favor, better quality of education at lower levels, better availability of basic services and utilities. This is my opinion. I do not see the type of tax and methodology has anything to do in this matter. Off course, mind set will change for the better with the TT but I do not see how disparity will be addressed for the bottom of the pyramid.
Tackling disparity through AK
Dear Prafulji,
Thanks for sharing your thoughts! Here's my two bits worth...
Disparity is the natural fallout of a combination of interdependent factors such as Poverty, concentration of wealth in a few hands and lack of just and efficient systems of governance. All these factors are 100% man-made problems, please note...
Disparity between the lowest and highest ends of our populace has crossed dangerous levels a long time back, as is evident from the growth of the 'red corridor' etc. Many experts think that this gap is increasing even more rapidly due to the 'statistical growth' based model of economic management that our current leadership is so enamored with.
In the last century, Communists tried to wipe out disparity in many nations by abolishing private ownership and impoverishing or killing the rich. However, this perverted view has failed everywhere and cannot be endorsed by any sane person.
The only way this can and must be tackled is by addressing the bottom of the pile, which if I may submit, is far more than the 10% you estimate - recent studies such as the Tendulkar panel's report would bear this out. So instead of pushing down the upper limit, we need to pull up the lower limit, that is raise the standard of living of the poorest.
As you have rightly pointed out, disparity will only reduce when the poor masses have gainful, fair and stable employment. Obviously, this cannot happen unless there are adequate employment opportunities on one hand, and the masses are employable on the other hand.
If you see our presentation - the final part after implementation of the proposal, you will see almost the very same logical flow of thoughts and inferences.
If we look at the aspects in your mail closely:
Lower level education, vocational training, availability of basic services and infrastructure for the poorest of the poor are never going to be lucrative business models. These segments will never attract corporates because the target customer just doesn't have the capacity to pay. All these aspects have always been and will remain the Government's responsibility alone. The Government will either do it or get it done through the private sector and pay for it - there is no alternative.
Government 'handouts' are never good in the long term and should be used with utmost discretion, but in the current situation, they may be needed in the form of a 'social security' scheme to give an immediate support to the impoverished millions who are denied basic dignity and rights of a citizen.
Ditto for Law and order, justice without delay or favor etc. Only a strong government and transparent systems of implementation can make this happen. This is precisely what the AK proposal intends to facilitate.
Removal of disparity in a nation as vast as ours is not an easy task and will take several years - but with abundant financial resource, eradication of the parallel economy and destruction of the means of corruption, we would surely be in a position to achieve it.
Rgds
Naren