A newly elected CM from a new party recently ridiculed the idea of replacing Income-Tax, Excise, Service Tax, VAT etc with Banking Transaction Tax.
http://www.taxanalyser.blogspot.in/2014/01/transaction-tax-replacing-all-other.html
He ridiculed it by saying India cant be made tax-free. He got the entire debate wrong. It is not about making India tax-free. Its about making taxation hassle-free by replacing multiple myriad taxes with one tax-of fleabite amount, collected in a hassle-free manner without having to go through torture of fling returns, maintaining records etc for millions of citizens.
Everybody squirms at the thought that all taxpayers big and small will pay same rate of tax on their banking transactions which is likely to be 2 % or even less than 1%. But today everyone-rich or poor pays double digit rates of a VAT/Excise/Service Tax.
What social justice is served if tax revenues dont come into the coffers due to evasion ? And evasion is due to high tax rates, myriad taxes, cumbersome paperwork, filing of returns, harassment by Govt officials? A tax which is theoretically sound on social justice plank and doesnt bring in revenues is no good at all. But a tax which, though not theoretically sound on social justice plank , brings in revenues can creat infrastucture, craet jobs and deliver social justice too!
And currently one pays VAT/Excise/Service Tax without being aware, BTT will be transparent and make every citizen conscious that he is paying a tax. And that will make him demand more accountability and transparency from Government.
http://www.taxanalyser.blogspot.in/2014/01/transaction-tax-replacing-all-other.html
He ridiculed it by saying India cant be made tax-free. He got the entire debate wrong. It is not about making India tax-free. Its about making taxation hassle-free by replacing multiple myriad taxes with one tax-of fleabite amount, collected in a hassle-free manner without having to go through torture of fling returns, maintaining records etc for millions of citizens.
Everybody squirms at the thought that all taxpayers big and small will pay same rate of tax on their banking transactions which is likely to be 2 % or even less than 1%. But today everyone-rich or poor pays double digit rates of a VAT/Excise/Service Tax.
What social justice is served if tax revenues dont come into the coffers due to evasion ? And evasion is due to high tax rates, myriad taxes, cumbersome paperwork, filing of returns, harassment by Govt officials? A tax which is theoretically sound on social justice plank and doesnt bring in revenues is no good at all. But a tax which, though not theoretically sound on social justice plank , brings in revenues can creat infrastucture, craet jobs and deliver social justice too!
And currently one pays VAT/Excise/Service Tax without being aware, BTT will be transparent and make every citizen conscious that he is paying a tax. And that will make him demand more accountability and transparency from Government.
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