The Union Budget that is presented at the
parliament, in the month of February, every year draws a lot of anxiety.. There
are pre-budget meetings conducted by various trade bodies like CII, FICCI,
which consolidates the recommendations from trade and industry and presents it
to the finance minister, before the budget is made. Well , as most of us have
become so acclimatized to think how better or how worse the impact of this
country budget could be, we do not think radically different
I personally have a recommendation to make.
It may sound insane, but this is just what you call a “out of the box”
thinking. I would like the country to stop collecting all existing taxes, such
as income tax, sales tax, property tax, luxury tax, service tax, excise duty,
customs duty and the whole gamut of it. Instead we will have just 3 taxes
- Wealth tax of 1% on assets, which comprises of land, building, gold, business investments and cash.
- Citizenship tax at Rs.500/- per year
- Forex spending tax of 20%
So how do I think these 3 taxes alone can
support the Indian economy. If you take a look at the last year Union budget, you
will find that the net revenue of this country from all taxes put together, was
200 billion of which only Rs.3.15 billion came from Wealth tax. While most of
you are aware that anyone holding assets above Rs.15lakhs is liable to pay
wealth tax, how many people pay wealth tax? Most of the wealth is undervalued. The
wealth tax is not a serious tax consideration, by the government. Why? Is it
because so much of undisclosed wealth is held by the politicians? Now let us
say you collect 1% wealth tax from every person, without any minimum ceiling,
the country will have more revenue generated than what it generates now.
Imagine the amount of wealth available in this country hoarded with few
individuals.
My argument is based on the simple logic,
that earning should not be penalized but hoarding should be penalized. While
the concept of savings is good, creation of unfair amount of wealth will help
continue the trend of the rich getting richer and poor getting poorer. You can
also call it the first mover advantage.
The second tax will be citizenship tax,
which is the basic tax every citizen has to pay. A billion citizens paying
Rs.500/- each will be 500 billion rupees. This tax amount should entitle
everyone to receive a Citizenship card, similar to a social security card
issued to the US
citizens (a compulsory document for every Indian, which also serves as the
voters card or identity card). This amount should be used for developing and
maintaining the needed infrastructure, which provides for free schooling and
free health care for all. In other words by collecting this Rs.500/- from every
citizen, the country promises to take care of the basic necessities of every
citizen.
The third tax will be on “forex spending”,
which will substitute all taxes such as import tax, custom duty etc. It is just a simple method to prevent people
from, excessively spending their untaxed
income on foreign goods or foreign travel which will be detrimental to the
economy.
This idea may catch the imagination of some
or have the criticism of many. However, it is a idea born out of my intuition
and intelligence and I felt it is worth sharing.
Without straight away rejecting this idea,
if someone can refine this idea taking into consideration many other
parameters, it will be a great new start. It will make life very simple for the
common man in this country.
No where in the world, this type of tax
structure exists. So what? Would not we Indians like to call ourselves as
“trendsetters”.
Happy Reading,
D. Senthil Kannan
Article dated Feb'08
