S. Narayan

From: S. Narayan mailto:Narayanmahans@mtnl.net.in
To: budgettwentyten@gmail.com
Date: Tue, Feb 9, 2010 at 9:34 PM
Subject: Growth and equity with low taxes

Growth and equity with low taxes “A budget for balanced growth and distributive justice with low tax rates” is my wish that represents the kind of budget that every common man has been looking forward to for several years.

But nobody seems to be sure if such a budget will ever be presented considering the projected growth at 7.5 per cent during the ensuing fiscalThe fiscal deficit of 12-13 per cent in the GDP and sidelining of the Fiscal Responsibility and Management Act by the UPA Government, the huge farm loan waiver, increase in the salaries of the Government employees, cost overruns on infrastructure projects and now the dole out of stimulus and subsidies to industrialists and businessmen will ensure that the common man will be in the same state for long time to come. On their part, the various state Governments are squandering the taxpayers funds on populist vote catching worthless schemes for putting up statues and monuments in the gardens, forests and on the sea fronts and providing TV and cable connections to the unemployed and BPL categories of the population. The increasing tax rates including high service tax have made all goods and services unnecessarily costlier for the common man while the shifting of fringe benefits tax to the employees from the employers has put additional load on the latter.

The job market has shrunk and so have salaries. In a booming economy, the possibility of higher taxation might have been easier. Not so now. The rate of inflation might have turned negative. This is inconsequential. Not so the unjustified high prices of food grains and other commodities that are stuck at the highest levels and refuse to come down. The rate of inflation has also reached 10% to catch up with the food grains and other articles of daily necessities.

The Government should seriously consider the absence of social security and plan retirement benefits for senior citizens, who account for more than 12 per cent of the population, and who have struggled to save every paisa for their survival so that they do not have to beg of anybody in their twilight years. Instead, bank interest rates are being reduced. Retirement benefits and interest thereon like Provident Fund, PPF and annuities hitherto exempted from income tax are proposed to be taxed under the newly proposed direct tax code bill. Every sector is demanding the stimulus of a rate reduction, justified or not. Succumbing to the demand, the Government has also been micromanaging bank interest rates to benefit industrialists, the business class and the real estate sector, ignoring the fact that the 35 per cent savings rate is contributed to by individuals with 12 percent of the citizens falling under the category of “senior citizens” while they are being pauperized by high inflation and mindless taxation policy of the Government.

The senior citizens have been marginalised and pauperized. Nobody cares for them, for they have no one to lobby for them, as India Inc, which has been demanding only exemptions lower interest rates and greater and longer economic stimulus only to fill up their pockets. The seniors of the country look forward to the finance minister to enable them to conserve their hard earned earnings without taxing their PF, PPF, gratuity and other retirement benefits.as proposed in the Direct Tax Code Bill. Instead introduce special deposit schemes with higher interest rates and higher tax limits with low tax rates in consonence with inflationary trends.

S. Narayan
mahans@mtnl.net.in

The author is an Advocate of Bombay High Court, a researcher and a social welfare activist