Inflation, Taxation and Social justice

Kirit Parikh Committee recommendation has started to worry common man already and many ask, “already we have very high inflationary pressure and wont this also add more impacting middle class like us”.( Problem with our political system is not in the system but people mind as people who are middle class/ upper middle class and rich don’t vote so politician are forced to create policy and benefits only for the voting community so if you feel you need change please never miss to express yourself and if you don’t like any candidate then under section 49-0 I can express saying I don’t vote which becomes valid)

 

Very true India has been a country of banana republic where we never thought of life beyond 10-15yrs politically it was always about election and vote bank so political parties to please the vote bank behaved in such a way that they can hold on to power. India with growing middle class is still seeing a policy towards poor by keeping them poor, with many free subsidy schemes which has hampered our agriculture growth as people have started to get benefit without working and productivity has come down. U.S and Australia are the biggest agriculture product exporter so only there is development and they also have subsidy for farmers they also protect their farmers, but they don’t get food shortage, India and many developing nations face food security.

India’s non-oil import has jumped last 10 month mainly from Agriculture imports and still there seems to be no major reforms in agriculture as this is vote bank and any reforms will take more time to show results so temporary measure is adopted to please poor to keep them poor.

Before we go deep in Kerala, Tamilnadu and pockets of Karnataka you don’t get local labor and people from less developed state come to work here and this has been seen in pockets of Maharashtra also which is why few political parties make an issue. Few days back a newspaper report said Kerala outbound remittance to states like Bengal, Bihar & Orissa has been on rise. Simple reason is Kerala achieved 100% literacy & Tamil Nadu is 2nd and now you don’t get farm labor in these states and TN has 44% urban population.

Development should see change in policy of government but that has never happened many Indian state adopt a policy of Re.1 rice, free television and many freebies which includes power and if no employment government will pay wages which has made government come to power. But these has its own recuperation how many years can u feed people and by doing so they become lazy without improving, tax other people for government failure. Give free good education, develop infrastructure, improve mobility of people make people multi lingual and jobs will be created. Now getting a driver for car has become most difficult and I see few ads saying call us we provide drivers on makeshift basis (temporary basis).

My father came out of the village near Sivakasi and came to a metro called Madras now called Chennai but people who were late to move didn’t move to metro in India but U.S, Australia, Gulf, Singapore and Europe and when I last visited my father’s village it was like a old age home and I didn’t see people below 45-50 and when I asked they told me their son/Daughter ( including Grand) live in Texas / Newyork / Melbourne which they were not able to pronounce but these old souls couldn’t adjust to new environment so they live in villages and get remittance from abroad. Below is a good explanation which I received from one of my friend.

Taxation and Social Justice - a funny explanation of how our economic system works!!

Suppose that every day, ten men go out for lassi and the bill for all ten comes to Rs.100.

If they paid their bill the way we pay our taxes, it would go something like this: The first four men (the poorest) would pay nothing. The fifth would pay Rs.1. The sixth would pay Rs.3. The seventh would pay Rs.7. The eighth would pay Rs.12. The ninth would pay Rs.18. The tenth man (the richest) would pay Rs.59. So, that's what they decided to do.

The ten men drank in the lassi shop every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily lassi by Rs.20.' Lassis for the ten now cost just Rs.80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free, but what about the other six men - the paying customers? How could they divide the Rs.20 windfall so that everyone would get his 'fair share?' They realized that Rs.20 divided by six is Rs.3.33. But if they subtracted that from everyone's share, then the fifth man and the sixth man would each end up being paid to drink his lassi. So, the shop owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. 

And so: The fifth man, like the first four, now paid nothing (100% savings). The sixth now paid Rs.2 instead of Rs.3 (33%savings) . The seventh now pay Rs.5 instead of Rs.7 (28%savings) . The eighth now paid Rs.9 instead of Rs.12 (25% savings). The ninth now paid Rs.14 instead of Rs.18 (22% savings). The tenth now paid Rs.49 instead of Rs.59 (16% savings). Each of the six was better off than before. And the first four continued to drink for free.

But once outside the restaurant, the men began to compare their savings. 'I only got a rupee out of the Rs.20,' declared the sixth man. He pointed to the tenth man, 'but he got Rs.10!' 'Yes, that's right,' exclaimed the fifth man. 'I only saved a rupee, too. It's unfair that he got ten times more than I did' 'That's true!!' shouted the seventh man. 'Why should he get Rs.10 back when I got only two? The wealthy get all the breaks' Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor'. The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for lassi, so the nine sat down and had lassis without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill.

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking lassis overseas where the atmosphere is somewhat friendlier.

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.

Note: The topic is very deep and I have hinted many things without going deep into subject, outline is there and this will give you many ideas and many things you see in life is around you.