Taxation: Progressive or Regressive?

Indian elite (with whom I deal) is an amazing lot. I frankly do not know about people in other countries, so let me speak for Indians alone. We like to complain about – poor service of trains, poor roads, corruption, high taxation, poor policing, poor state machinery, pathetic infrastrucutre in general, fall in the education standards, etc. etc. ….Ok the order may be wrong but the topics are same. Let me restrict myself to Mumbaikars.

Let us examine them one by one.

Poor service by trains: I travel by local trains, and have been doing so for the past 32 years. Frankly I may have been pushed, shoved and hustled but I have not lost more than 2-3 days of work in the past 32 years. This is a 6 sigma performance. At prices which people in other countries can only dream of. For example the FIRST CLASS pass from Nerul (where i live) to Vashi (workplace) is Rs. 300 a month. My car parking charges would be about Rs. 450. No doubt about it. It is a world class service at a throwaway price. The load on the railways is caused by builders who keep adding one trainload of people to EACH station every year. Blame the builders and those who create jobs in Mumbai, not the RAILWAYS.

Poor Roads: Sadly the cost of building and maintaining the roads is quite high. However development includes creating roads – everybody needs them. The depreciation is caused by the vehicles that ply on them. If all the road building costs – and maintaining them – can be tabulated and spread among the vehicle owners (under 6% of Mumbaikars own a car) – the cost of each car will go up 100%. Who is subsidising whom, and cribbing too!  A new crib I hear is “Nano” will create more traffic. The last 2 persons who complained to me own a Toyota Corrolla and a Honda Accord! We should rethink road tax.

Corruption: See the Tata Tea ad. It hits exactly where it hurts. If you give, they will take. If you stop, they will starve. It is as much a supply side problem as a demand side problem!

High taxation: This is the biggest joke! We are not a highly taxed nation. If our middle class (in Mumbai at least) start paying market rates for water, road usage, schooling, other civic services they will not have so much money to spend. Imagine a residential flat in Maker Tower H (Cuffe Parade) with a bath tub – 100 litres – being used by 4 people in a day pay the SAME RATE of cost per unit as a chawl in Parel. This sucks! Taxation especially for such services has to be at increasing rates (same for power?). If the service provider throws the higher volume argument (fair enough) service tax can be made progressive – it will only be fair.

will take up the other points later…

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One Response to “Taxation: Progressive or Regressive?”

  1. Amazing piece subra. Missed it earlier..

    Can I request you to train young guns with primers in Finance.
    Am sure there are many around keen on your insights and approach.

    As a teacher: you run the risk of loosing this legacy earned due to your environment, teachers and self effort.

    I urge you again to think on this..


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