Who Needs A Cheaper Merc?

When Manmohan Singh was elected Prime Minister of India, I was pleased.  When he appointed Chidambaram as his Finance Minister, I was elated.  I even blogged about it on this site, in a post entitled “New, Improved India”.

So, it was a bit disappointing to read that, in the Union Budget 2005-06, Chidambaram has proposed a tax on withdrawals of over Rs. 10,000 from bank accounts. 

After all, it was my money, and I was going to be taxed for withdrawing it from my own account!  The official story was that it was to curb black money transactions in the economy.  I could not fathom why black money launderers would use legitimate bank accounts for their transactions.  But I told myself : He’s a learned economist.  He knows what he’s doing.

It was a bit disappointing to learn that just 2% of India’s population pays taxes

And, many of the provisions available to the middle-class taxpayer by way of rebates and deductions until this year, have now been removed.  But I told myself : He’s a learned economist.  He knows what he’s doing.

But, I could not understand it any more when I learned that Mercedes lowers its prices by Rs. 100,000 :

DaimlerChrysler India on Tuesday announced an up to Rs 1 lakh reduction in the prices of its premium sedans — C-class, E-class and S-class — citing cost benefits from the 5% cut in customs duty announced in the Budget.

We are country with over 1 billion people. Hundreds of millions of us are uneducated and live ‘below-the-poverty-line’ in apalling conditions.  An equally significant chunk is the burgeoning Middle Class – forming the bulk of the 2% who pay all the taxes that fuel the nation. 

This ‘Middle Class’ is rewarded for its honesty and hard work by increasing tax burdens in every aspect of life.  While our politicians abuse public spending at will, and many rich industrialists and businessmen go scot-free without any tax liability whatsoever, our honourable (Harvard-educated) Finance minister has decided to tax cash withdrawals from an ATM, but make it easier to buy a Benz!

I can’t help but wonder: Do we really need a cheaper Merc?

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2 Comments

  1. It probably makes more sense for them to collect little money from a burgeoning (sans the flourishing aspect) middle class population than it is to collect relatively huge sums of money from few of the upper class.A numbers game at its best.We the real people, suffer.

  2. The collection of tax in our country can be greatly increased with strict enforcement. The Finance Minister wagers on improving compliance by lowering tax rates. It is true that so much money sidesteps the fiscal system that it is not an exaggeration to aver that a parallel economy is thriving in the wilfully ignorant gaze of the government. We know that the disparity in the incomes and wealth of people in this country is painfully large that i ask whether the measure of per capita income is relevant and meaningful at all.Industrialists of various hues, rich farmers and other unscrupulous characters evade tax without any qualms, thus amassing wealth. On the contrary salaried individuals have to willy nilly pay tax as other self-respecting individuals of a democracy anywhere else in the world would do. We have a reason to feel discriminated against because we don’t trust that our taxes are put to good use nor is the accountability for the public money in evidence. Yet as educated individuals we must know that the government needs that money for its stated purposes.We would be barking up the wrong tree by complaining about taxes.it has been said that taxes and death are certain. what matters more is a regime of draconian laws put to work to get the evaders to cough up their due so we may as a country have enough resources for growth and development.In seeking to impose a tax on withdrawal of cash from banks the sage and shrewd minister plans to have a tax trail on large withdrawals. in an interview to a leading business news channel he said that he has information that the lay don’t have access to. the intention, he stated, is not to tap another source of tax but to trap the “big fish” and nudge people to favour cheques. we may argue that a piffling tax may not deter people from hoarding their ill-gotten wealth but it is a beginning.in a free world with open markets duties must come down because these are articial barriers to free trade. it could be a merc or the music player i desire but i want to buy it here at the same price at which it is sold in its country of origin..we may stop griping when the tax man can effectively get everyone to pay tax lawfully. when all truly become equal under the law then we may at least stop seeing ourselves as victims. i hope that the stacks of currency notes tumble out of beds and lockers some day !

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