India -Taxing the super rich more

02/02/2013

Recently there is a talk about taxing the super-rich more. At present there are In India only 3 rates i.e 10%, 20% and 30% of taxable income, for taxing the income of people in India. These slabs can be increased to 5 or 6. In several countries there are 5 slabs. In several developed countries, the maximum rate of income tax exceeds 50%. India can introduce tax rates of 40% and 50% for higher income groups. In countries like Italy and Netherlands, everyone has to pay income tax irrespective of the income. It is only fair that those who enjoy more benefits from government viz low income people should also be made to take some responsibility to pay at least a token contribution for the benefits. The lowest tax rate could be nominal –may be 1% or 2%. Cost of collection of income tax in the lowest slab would be high but ways can be found to minimise the cost of collection. Alternately indirect taxes like excise duty and sales tax rates should be increased.

Income from agriculture should also be taxed. However farmers should have the freedom to fix prices for their produce in the same way as industrialists fix prices for their products. Government should not interfere by regulations like procurement prices, ban on exports, export duty etc. Of course, governments can do away with the grants and subsidies.

The minimum wages should be so much that it is sufficient to meet all the basic needs and tax payments.

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Food security requires higher foodgrain prices

29/09/2012

There was a time when India had acute shortage of sugar. Then the government increased the procurement price of sugarcane and continues to increase the procurement price periodically. This has led to India becoming not only self sufficiet but also surplus in sugar.Not only this, sugarcane is one of the only 2 or 3 crops in which India’s yield is higher than world and Asian average yield.

If countries which are deficit in cereals increase procurement prices substantially,the farmers will find ways to increase the yield and production. These countries should also impose import duties on cereals to such an extent that the local produce becomes cheaper. The deficit in food grains can easily be wiped out in most of the deficit countries.

The question will arise as to how poor people who are malnourished for want of money to buy food gains shall buy at higher prices. The people do not have buying power because they do not have enough work. The govenments there should undertake massive works like digging lakes, canals, wells,laying roads, railway lines, power transmitters and lines solar power stations, hydro-electric power stations etc. Most of the west and east African countries receive over 1000 mm rainfall every year and hence increasing food grain production may not be a big problem at all.