[Kumaran93R]

Originally Posted by Geta

5) You can not make the poor rich by making the rich poor.

Yes, agreed. But the rich-poor wealth inequality gap has been increasing in India. India is now one among the countries with the highest divide.

Adding insult to the injury, the pandemic has widened this gap considerably. Most of us here have been enjoying our salaries sitting in the comfort of working from home. And since we don't have much of our usual discretionary spending at hotels, malls, etc,. A lot of the 1% have been investing in the share market and increasing their wealth. There's a reason why the market was on a high when the economy was literally stopped.

It is the government's job to tax the rich and reduce the wealth inequality. Whether the said tax is actually being spent properly is another debate.

[ashokrajagopal]

Originally Posted by Geta

These 1% of the citizens get nothing in return from the government in the form of social security, free healthcare, free education etc. If these people pay taxes for say 15 years and then lose a limb or lose a job, the government will not pay a penny back to them.

Well, I believe you are arguing on the side of keeping income tax low, Corp tax low and okay with indirect taxes.
Which is fine, except that if you lose a job, government will not pay anything to you, plus they can tax you more with indirect taxes, right ?

If you are worried about the precariousness or lack of social security, shouldn't your argument be against indirect taxes ?


Also, another important aspect esteemed members are mixing up here.

Tax Cut : When government cuts taxes from a source. It has to stop there. Goverment foregoes revenue.

Where government decides to cut taxes from one source, losing revenue and finds the revenue from another source by increasing tax, the Tax Cut pareto optimality argument does not fit there.

[Stribog]

Originally Posted by ashokrajagopal

I am not really sure I disagree with you, but I do have to point out some problems in your arguments.

a) You are saying Inflation is low, because WPI and CPI is low. But WPI and CPI are both created based on estimates, and governments around the world are notorious to not correctly estimate these. For India WPI was about 9 or so and CPI about 4 or so. These do not have to be equal but glaring gaps are not really pointing to correct estimation. Inflation data is not high frequency data.
Saying inflation is low when actual prices are higher because government is choosing to calculate it like that is kind of circular logic. Fuel is costlier, LPG is costlier, and vegetables are costlier at retail level.

b) Not just car owners, or even bike owners, local rural transport is substantially private jugaad setups and fuel price rise affects a lot of people. It is not something that only affects car owners. Some stuff is subsidised when it comes to food etc, but some are not. For example there is zero subsidy on cooking gas now, after the much touted schemes.

c) It seems like you go into the Stock-to-flow comparison and back. If you compare everything to GDP, please stick to that.
If you are doing actual numbers, please stick to that.
There is really no point in stopping counting at 2019, because the corporate tax cut was in 2019.

For instance, Corporate tax projected for 2021-2022 as per the Budget is 5.47L Crore.
This is smaller than 5.71 L crore, which is the actual amount collected in 2017. Thats Corporate tax revenue from 4 years ago.

This is reduced revenue(absolute numbers), reduced revenue percentage, reduced percentage of revenue to GDP ratio.
It seems to me that you imply the opposite of that, which is not true.

d) When it comes to Jobs etc, we have to discuss actual jobs. Not the crores of investment. Crores of investment include stuff from real estate cost to company vehicles and do not matter directly.
The way to measure jobs is to actually measure jobs. How many new jobs. What is different from the trend.
I am not sure you explain these.

e) GST is tax paid by buyer. Corporates do not provide GST. Government decides to tax consumer and consumers pay. Government decides not to tax consumer, then consumers wont pay. Attributing GST to corporates who are buyers is not correct.

I specifically use 2019 as the stop year because we then get into the Covid period, which affects all aspects of our economy from production, manufacturing, consumption and consequently income and expenditure. The 2 Covid related years are not any reliable or longterm yardstick to measure any aspect of our economy except maybe Capex because the spend is medium to long term aka textbook Keynesian economics to kickstart the demand side of the economy.

On the subject of inflation, as I have clarified repeatedly, food which has the highest weightage in the basket by far has hard price caps (at the poorer levels of the society) via the PDS system. One COULD argue that this only causes an increase in deficits (both state and centre) but that is an entirely different topic.


Veggie prices fluctuate seasonaly which is a function of our poor logistics and cold storage capabilities, but broadly speaking they have not risen beyond the 2-3% mark in 5 years now.

Here is a sample,

Veggie prices in Chennai - 21st July 2014.

https://oddanchatramvegetablemarket....ails-23072014/

Veggie prices in Chennai today

http://www.cmdalayout.com/CommodityR...RateToday.aspx

Random sample. Veggies / KG in 2014 and 2021.

Beans - Rs 45 / 50
Tomato - Rs 46 / 30
Onion - Rs 25 / 25
Potato - Rs 30 / 25

Etc etc

In many cases, a month to month comparison over 7 years yields even lesser prices.

Once again, prices in the Aircon'd grocery shops the urban upper class shops in might not reflect reality for the poor.

On transport - Please provide data to back this claim up. As provided by me, from the 2011 census, the overwhelming majority (80%+) either don't walk to work, walk, cycle or use buses. Prices of buses / public transport is capped in most states again. This does lead us to the challenge of bankrupt transport corps but then again, it is the subject of an entirely different conversation.

I use ratios or absolute numbers where relevant, they are different metrics and their use in my arguments will be contextutal.

With regards to rise in corp tax, the point I was making is that it beat estimates EVEN in an a Covid year. But given the near zero economic activity from March to July last year (an entire quarter), exports at decadal lows in this period, you really don't have a data point to compare.

The theoritical argument I was and am making is, you cannot attract greater manufacturing with higher tax rates, esp when we had one of the highest corp tax rates in the world.

On the topic of manufacturing creating jobs and a substantial increase in greenfield manufacturing FDI over the past 2 years, again, we would need to wait 3-4 years for the real numbers to emerge, but the economic history of the world over the past 300 years tells us very clearly that an agrarian economy can never create enough jobs for it to escape the low income trap. That the only way forward is to create manufacturing related jobs.

The bogeyman of automation might just come true in the next few decades but right now it is just that.

[Stribog]

Originally Posted by Kumaran93R

Yes, agreed. But the rich-poor wealth inequality gap has been increasing in India. India is now one among the countries with the highest divide.

Adding insult to the injury, the pandemic has widened this gap considerably. Most of us here have been enjoying our salaries sitting in the comfort of working from home. And since we don't have much of our usual discretionary spending at hotels, malls, etc,. A lot of the 1% have been investing in the share market and increasing their wealth. There's a reason why the market was on a high when the economy was literally stopped.

It is the government's job to tax the rich and reduce the wealth inequality. Whether the said tax is actually being spent properly is another debate.

India is NOT EVEN remotely "one of the countries with the highest divide"

https://www.cia.gov/the-world-factbo...try-comparison

We are in fact solidly in the lower quadrant of the global economy here.

The share market being on a high also has nothing to do with the "1%"

Global wealth sees India (despite all the gloom and doom in our media or even in our forum here) as a bellwether for growth the coming decade or so.

At a meta level markets are forward looking (minus the herd investors who day trade and lose or win big time on a daily basis). There are other factors too, FY 20-21 saw the greatest rise in corp profits in decades.

You then have the two massive factors of M3 Money supply and FPI's.

With the stimulus packages the supply of M3 Money has grown substantially in our economy and this too is driving the rise in the bourses. With the GoI's revenue streams collapsing the RBI was forced to print notes to enable it to borrow money more cheaply. This then drove down FD rates which also saw the rise of retail investors looking for better returns. Fun fact here - the rise of retail investors rose 40% from Dec 2020 to Mar 2021.

Then you have FPI's pumping in money in record numbers.

https://www.business-standard.com/ar...0NSDL%20showed.

FPI's have generally been pumping in money into emerging markets as they see better returns than in developed economies during this time of Pandemic induced stress and India has been a particularly large recipient.

FPI portfolio values are also at a record high at $ 575 Bn.

https://financenews.expert/fpi-portf...rch-2020-lows/

All this is not even 1% of the actual complexity, I have simplified it lest it become an economic thesis paper. But suffice it to say that it is far more complex than "the super rich investing and getting richer while the poor break their backs for them".

Mods - I made 2 back to back posts as given the length of the posts, it would have become unwieldy as 1 large post. Trust that it is okay.

Kumaran Sir, Hyper inflation? Please do not use hyperbole when reality is not even 1% close to it.

Hyperinflation is defined as when there is a monthly rise of 50% or more in prices or annual rate of 1000% or more.

Our current inflation rate is 4.89%

Here is our inflation rates over 3 years.

https://tradingeconomics.com/india/inflation-cpi

July 2019 - 3.5%
July 2020 - 6.73%
July 2021 - 6.5%

To qualify as "hyperinflation" India should be at something like 800% inflation in July 2021. Or even something like 100% by Feb 2021.

The last time India had such high (300%) levels was in 1943-44.

[Geta]

Originally Posted by ashokrajagopal

Well, I believe you are arguing on the side of keeping income tax low, Corp tax low and okay with indirect taxes.

Mostly yes. Any consumption driven, broad based tax is good for the economy.

Which is fine, except that if you lose a job, government will not pay anything to you, plus they can tax you more with indirect taxes, right ?

This is like arguing for more lenient penal laws saying "What if you end up committing a murder tomorrow?". The expenses incurred by me after a job loss is my problem, not the problem of someone who still has a job and pays his direct taxes. Transferring my problem to my neighbour who is employed and fighting multiple battles simultaneously, is unfair.

If you are worried about the precariousness or lack of social security, shouldn't your argument be against indirect taxes ?

1) This country needs about Rs 33 lac Crores annually to run the show. If there is less indirect taxes, only the same 1% of people need to bear that deficit also. No other option.
2) It doesn't take much for the government to extend the social security to the taxpayers as it is already giving loads of subsidies to the non tax payers in the form of free healthcare, free education, job reservations based on various criteria, free laptops, free cycles, subsidised cooking gas etc.

And so, another important aspect esteemed members are mixing up here.

Tax Cut : When government cuts taxes from a source. It has to stop there. Goverment foregoes revenue.

Where government decides to cut taxes from one source, losing revenue and finds the revenue from another source by increasing tax, the Tax Cut pareto optimality argument does not fit there.

This government has not cut direct taxes any time in the last 7 years, worse, personal IT slabs have not even been adjusted to inflation for the higher slabs. They have actually taken away many provisions of saving IT by the salaried class. Whatever the minimal tax cuts are for the lowest slabs, who hardly pay any tax even otherwise. This was a regressive step as tax base needs to be widened.

[green_ninja]

Reading the arguments and counter arguments on this thread I couldn't help but quoting a recent Whatsapp forward:

Indians will drink alcohol at any cost

Want petrol at a low cost and

Vaccination for free!

Sorry for the OT post but things are the way they are and we need to look for a way to deal with it. While the fuel cost is biting hard, I still find people rarely switch off their vehicles at the traffic signal even if the wait is for 3-4mins. This applies uniformly to the upper class aka car owner and the lower class aka commuter bike/scooter owner. I suppose fuel prices aren't that high yet

[ashokrajagopal]

Originally Posted by Stribog

I specifically use 2019 as the stop year because we then get into the Covid period, which affects all aspects of our economy from production, manufacturing, consumption and consequently income and expenditure. The 2 Covid related years are not any reliable or longterm yardstick to measure any aspect of our economy except maybe Capex because the spend is medium to long term aka textbook Keynesian economics to kickstart the demand side of the economy.

This methodology of using theory is not correct.
It is Covid years alright, 2021 budget came out during Feb 2021, when we were done with the first wave and the results for the year were out.
The estimate for Corporate tax was lower than 2017 for 2021-22.
Meanwhile the estimate for Income tax was higher.
Estimate for Indirect taxes ( GST, Excise etc ) were higher.

And we do know the actual high frequency EBITDA numbers for at least the high end listed corporates. They have all surged, and hence the market rally. All Financial publications have covered this.

So, in all your argument above is saying that Corporate tax estimate is low because of Covid, which does not hold good for Income tax or Indirect taxes.
This, while we have booming stock market where the Corporate profits are driving P/E ratios.

Originally Posted by Stribog

On the subject of inflation, as I have clarified repeatedly, food which has the highest weightage in the basket by far has hard price caps (at the poorer levels of the society) via the PDS system. One COULD argue that this only causes an increase in deficits (both state and centre) but that is an entirely different topic.

Veggie prices fluctuate seasonaly which is a function of our poor logistics and cold storage capabilities, but broadly speaking they have not risen beyond the 2-3% mark in 5 years now.

Here is a sample,

..

Here again, you are using After-the-fact estimates that are used by Government and agencies to suggest that inflation is not high. That is not how inflation works. Inflation hits, then government picks and chooses sectors to control inflation, does its thing and brings down the inflation.
Meaning Inflation exists, and then government brings it down.
Sector to sector, there are tons of news published where the price rises go out of control.
Eg. https://www.cmie.com/kommon/bin/sr.p...95630&msec=813
Cooking oil on the boil, price jumps 8% in last two weeks despite duty relief

Government stats showing inflation at X% at a given time does not mean inflation was always X%. It is a lagging indicator. This is seen every year in discussion related to Onion, pulses etc in parliament.

On transport - Please provide data to back this claim up. As provided by me, from the 2011 census, the overwhelming majority (80%+) either don't walk to work, walk, cycle or use buses. Prices of buses / public transport is capped in most states again. This does lead us to the challenge of bankrupt transport corps but then again, it is the subject of an entirely different conversation.

No, please provide data to back your claim that "all poor people use subsidized public transport". Public transport is a sparse thing in India, even in large city outskirts. Even with the available public transports, the prices have been hiked. Example Tamil Nadu in 2018. Where people move, they have to make do with whatever is available either own transportation, under the radar jugaad setups I mentioned, or the public transports.

2011 census is 10 years old. We know this was also the era when there were no delivery apps, for example. And we know how the whole of last year, commerce was run the delivery services.

With regards to rise in corp tax, the point I was making is that it beat estimates EVEN in an a Covid year. But given the near zero economic activity from March to July last year (an entire quarter), exports at decadal lows in this period, you really don't have a data point to compare.

I don't get what beat estimates here.
Corporate Revenue beat estimates, Corporate tax went below the actual number collected 5 years back. For the last year, economic activity for corporates generally stood okay, which is why we have the stock market performing well now. During corporate tax reduction, it was estimated about 1LCrore or so revenue loss by the government, which to be fair it was planning to make from asset sales.
The asset sales did not happen, revenue did not grow in 2 years and Govt started squeezing petrol to get the revenue back.

The theoritical argument I was and am making is, you cannot attract greater manufacturing with higher tax rates, esp when we had one of the highest corp tax rates in the world.

On the topic of manufacturing creating jobs and a substantial increase in greenfield manufacturing FDI over the past 2 years, again, we would need to wait 3-4 years for the real numbers to emerge, but the economic history of the world over the past 300 years tells us very clearly that an agrarian economy can never create enough jobs for it to escape the low income trap. That the only way forward is to create manufacturing related jobs.

The bogeyman of automation might just come true in the next few decades but right now it is just that.

See, the problem here is you are shifting from Normative theory to descriptive metrics to suit your argument.
If you have normative theory that talks about results coming in 5 years or so, that is fine, but please keep the jobs out of that.

For jobs that got created, there are actual numbers, which is not quoted either by Govt PR campaigns or anywhere else. The reason is obvious, it is abysmally low.

Where would agrarian economy etc fit in this argument? Changing an agrarian economy to anything else requires steps in that direction.

FDI, Corporate Tax reduction, X, Y,Z does not automatically translate to job creation.

In some cases it does, in some cases it does not.

[JithinR]

Originally Posted by green_ninja

Sorry for the OT post but things are the way they are and we need to look for a way to deal with it. While the fuel cost is biting hard, I still find people rarely switch off their vehicles at the traffic signal even if the wait is for 3-4mins. This applies uniformly to the upper class aka car owner and the lower class aka commuter bike/scooter owner. I suppose fuel prices aren't that high yet

I actually switch off even my bike if the wait time for a signal is more than 20s and this was during pre-covid times when fuel prices were crazy but not ridiculous.

I am not sure...maybe you just move in a high income area. All this is anecdotal at the end of the day.

Edit: Oh and fuel prices are as high as they should be from my personal perspective. Before COVID, I was thinking of getting myself an RE650 once they iron out the niggles. But now I have just booked the Ola electric scooter.

Yes, I realise that I am probably much more comfortable in my finances than the multitude of poor in India but it doesn't mean I enjoy handing my money out to the Government.

[Stribog]

Originally Posted by ashokrajagopal

This methodology of using theory is not correct.
It is Covid years alright, 2021 budget came out during Feb 2021, when we were done with the first wave and the results for the year were out.
The estimate for Corporate tax was lower than 2017 for 2021-22.
Meanwhile the estimate for Income tax was higher.
Estimate for Indirect taxes ( GST, Excise etc ) were higher.

And we do know the actual high frequency EBITDA numbers for at least the high end listed corporates. They have all surged, and hence the market rally. All Financial publications have covered this.

So, in all your argument above is saying that Corporate tax estimate is low because of Covid, which does not hold good for Income tax or Indirect taxes.
This, while we have booming stock market where the Corporate profits are driving P/E ratios.




Here again, you are using After-the-fact estimates that are used by Government and agencies to suggest that inflation is not high. That is not how inflation works. Inflation hits, then government picks and chooses sectors to control inflation, does its thing and brings down the inflation.
Meaning Inflation exists, and then government brings it down.
Sector to sector, there are tons of news published where the price rises go out of control.
Eg. https://www.cmie.com/kommon/bin/sr.p...95630&msec=813
Cooking oil on the boil, price jumps 8% in last two weeks despite duty relief

Government stats showing inflation at X% at a given time does not mean inflation was always X%. It is a lagging indicator. This is seen every year in discussion related to Onion, pulses etc in parliament.



No, please provide data to back your claim that "all poor people use subsidized public transport". Public transport is a sparse thing in India, even in large city outskirts. Even with the available public transports, the prices have been hiked. Example Tamil Nadu in 2018. Where people move, they have to make do with whatever is available either own transportation, under the radar jugaad setups I mentioned, or the public transports.

2011 census is 10 years old. We know this was also the era when there were no delivery apps, for example. And we know how the whole of last year, commerce was run the delivery services.




I don't get what beat estimates here.
Corporate Revenue beat estimates, Corporate tax went below the actual number collected 5 years back. For the last year, economic activity for corporates generally stood okay, which is why we have the stock market performing well now. During corporate tax reduction, it was estimated about 1LCrore or so revenue loss by the government, which to be fair it was planning to make from asset sales.
The asset sales did not happen, revenue did not grow in 2 years and Govt started squeezing petrol to get the revenue back.



See, the problem here is you are shifting from Normative theory to descriptive metrics to suit your argument.
If you have normative theory that talks about results coming in 5 years or so, that is fine, but please keep the jobs out of that.

For jobs that got created, there are actual numbers, which is not quoted either by Govt PR campaigns or anywhere else. The reason is obvious, it is abysmally low.

Where would agrarian economy etc fit in this argument? Changing an agrarian economy to anything else requires steps in that direction.

FDI, Corporate Tax reduction, X, Y,Z does not automatically translate to job creation.

In some cases it does, in some cases it does not.

Corporate profits surge because of cost reductions, and I fail to see the contradiction in the argument, I have mentioned that FY 2021 saw corp tax collections beat estimates, said estimates might have been projected low on account of the pandemic.

That being said these are aberrations, and will be normalised once we move into the post Pandemic era. To make any value judgement using this period is bound to lead to an erroneous conclusion.

My point though still remains, almost all countries that managed the leap to middle or higher income status post WW2 (non colonial countries) did it on the back of encouraging manufacturing, sops and low tax rates. China, S Korea, Japan (though Japan is an outlier here given its high GDP and industrialisation rates even after its being levelled during WW2).

High tax regimes in an emerging market are not conducive to attracting businesses. That is a no brainer unless you have some new emergent studies that dispute this claim.



On the topic of bus fares, lets take TN as an example, what is the value of increase in public transport / bus fares? It is not even remotely in line with the fuel price rise.

Let us take TN as an example - 1 Hike in 2012, then the hike in 2018.

What was this hike? Moffusil buses saw a hike of Re 1 for a distance of 10 Km. 30 Km services saw a Rs 6 hike.

As of 2018, only AP had higher (marginally) fares of public buses, Karnataka, Kerala, Telengana all had lower fares so you could argue that TN is at the higher end of the spectrum here.

The relevant notification.

The fuel price hikes since then have not had any bearing in fare hikes.

The whole of TN has 1,100 town buses run by private operators as opposed to 14,000 operated by SETC (source TNSTA policy note 2019).

12% of the populace take buses to work daily, applying this proportion, 90% would take state govt run buses. Law of supply and demand ensures local town bus operators keep prices reasonable (for which data I do not possess, but is a reasonable assumption)

Honestly though, what is your argument? That excise mop up is bad? That we should not be creating infrastructure, esp the basics of Bijli Sadak Pani and then Ports, airports, urban mass transit, sewerage connections etc?

Or that corporates are bad (as many here have averred) and should be taxed to within an inch of their life because well...corporates bad and conversely, farmers good?

If you could state your own argument we could have a discussion around this as I think we are straying far from the topic.

My contention (as I have now typed pages and pages lol) is simple,

1 - Fuel price hikes DO NOT affect the mass of the populace for various reasons which I have substantiated. Unlike say an increase in the price of food which would have the masses out on the streets by now

2 - Fuel excise mop up is a temporary pain the mostly upper income classes bear in a disproportionate manner, to fund the massive NIP which is estimated at something like 100 lakh crores over the coming decade.

3 - To NOT mop up this extra revenue is unacceptable (to me), ESP during this pandemic period when governmental revenues are shot to pieces in general and will need 2-3 years to right the deficits we are now running up and will continue to run up

All of this is politics agnostic. Be it whichever party in power, my stance would remain unchanged.

[ashokrajagopal]

Originally Posted by Stribog

Corporate profits surge because of cost reductions, and I fail to see the contradiction in the argument, I have mentioned that FY 2021 saw corp tax collections beat estimates, said estimates might have been projected low on account of the pandemic.

That being said these are aberrations, and will be normalised once we move into the post Pandemic era. To make any value judgement using this period is bound to lead to an erroneous conclusion.

My point though still remains, almost all countries that managed the leap to middle or higher income status post WW2 (non colonial countries) did it on the back of encouraging manufacturing, sops and low tax rates. China, S Korea, Japan (though Japan is an outlier here given its high GDP and industrialisation rates even after its being levelled during WW2).

High tax regimes in an emerging market are not conducive to attracting businesses. That is a no brainer unless you have some new emergent studies that dispute this claim.

The contradiction in your argument is that you claim the virtues and future benefits of Corporate tax reduction, while ignoring 3 years of reduced revenue.
2019-20
2020-21
2021-22 (Estimated as per current budget)

Here again above you are pulling out arguments that suit you (manufacturing etc) without mentioning how much the post WW2 countries taxed. For instance South Korea taxed about 30-35% upto the 90s, reduced to 25% around GFC time if I am not wrong. Where manufacturing, exports etc have to be encouraged, India also has its SEZs and zero taxed incentives. Across the board corporate tax reduction is a totally different thing, and not related to Manufacturing push. Your claim is wrong because you are not presenting data in entirety.

The idea of reducing tax to boost business is such that reducing tax will grow the industry and therefore revenue. We have seen this happen with India cutting taxes for IT industry, Export based industries, and for MSMEs with the tax cuts for lower down sectors.
The 2019 tax cut was clearly calculated specifically targeting the top earning corporates. The loss in revenue is clearly shown in the budget document for 3 years.

On the topic of bus fares, lets take TN as an example, what is the value of increase in public transport / bus fares? It is not even remotely in line with the fuel price rise.

Let us take TN as an example - 1 Hike in 2012, then the hike in 2018.

What was this hike? Moffusil buses saw a hike of Re 1 for a distance of 10 Km. 30 Km services saw a Rs 6 hike.
As of 2018, only AP had higher (marginally) fares of public buses, Karnataka, Kerala, Telengana all had lower fares so you could argue that TN is at the higher end of the spectrum here.

The relevant notification.

The fuel price hikes since then have not had any bearing in fare hikes.

The whole of TN has 1,100 town buses run by private operators as opposed to 14,000 operated by SETC (source TNSTA policy note 2019).

12% of the populace take buses to work daily, applying this proportion, 90% would take state govt run buses. Law of supply and demand ensures local town bus operators keep prices reasonable (for which data I do not possess, but is a reasonable assumption)

This whole thing is based on public transport(govt or private operated formal mode) covers all travel which I contended in the previous post itself. No, that is not the case, India is sparsely covered by public transport like buses. Where they are covered, fuel prices will rise to cover that for sure or the operators crash out. Meteoric rise in cost has been happening for last 18 months or so, so the prices will catch up.

Since you claim some percentages, here are some more relevant numbers as per 2016 ICE Survey, available here
https://www.livemint.com/Politics/Yd...wowheeler.html
"
A two-wheeler is the vehicle of choice for most Indians in their daily commute to work, the survey suggests, followed by the bicycle. Thirty-three per cent of Indians use a two-wheeler to reach work while 31% use a bicycle. Fourteen per cent reach work by a public bus while only 3% use a local train (or metro) to reach their place of work.
"
This is 2016 data, and I would extend that to about 35-40% or so that use two wheelers to commute.
To add to that, I would also say about 10% of working class rely on vehicles as part of their job even though they don't commute to work( drivers on hire, delivery services, logistics, sales representatives etc).

Honestly though, what is your argument? That excise mop up is bad? That we should not be creating infrastructure, esp the basics of Bijli Sadak Pani and then Ports, airports, urban mass transit, sewerage connections etc?

Or that corporates are bad (as many here have averred) and should be taxed to within an inch of their life because well...corporates bad and conversely, farmers good?

If you could state your own argument we could have a discussion around this as I think we are straying far from the topic.

My contention (as I have now typed pages and pages lol) is simple,

1 - Fuel price hikes DO NOT affect the mass of the populace for various reasons which I have substantiated. Unlike say an increase in the price of food which would have the masses out on the streets by now

2 - Fuel excise mop up is a temporary pain the mostly upper income classes bear in a disproportionate manner, to fund the massive NIP which is estimated at something like 100 lakh crores over the coming decade.

3 - To NOT mop up this extra revenue is unacceptable (to me), ESP during this pandemic period when governmental revenues are shot to pieces in general and will need 2-3 years to right the deficits we are now running up and will continue to run up

All of this is politics agnostic. Be it whichever party in power, my stance would remain unchanged.

This is kind of a gish gallop technique, where you are posting up binaries to choose so that your argument is convenient.
Excise tax bad, therefore no spending on infrastructure
Reducing tax on corporates is twisted to be opposite of "taxing corporates within an inch of their life" and conversely farmers.. Read thru this thread, the only people talking about farmers are those bashing them.
Fuel price is nothing compared to food price increase, but food prices did not increase because inflation numbers said so. Really?

The gist is, you are picking your years so it is convenient and framing PR style statements without complete data to back them up.
Nobdoy can back up the claim that fuel price increase is temporary. That is purely a hope unless you are the government.
Whatever plan the government drew, if the idea is to fill up the revenue deficit from Corporate taxes with Excise taxes, and things like cutting subsidy on cooking gas, that is fine. But please clearly mention that.

During the covid year
Corporate tax collected: 4.57 L crore
Excise duty collected: 3.75 L Crore.
There has been reduced revenue on corporate side going back 5 years prior value for 2021 estimate.
5.5L crore in 2021-22, where as 2017-2018 actually collected 5.71 L crore.

Its one thing to say you support governments policies. But present all the numbers.

That would be all from my side, I do not see this thread going objectively.

[ashokrajagopal]

Originally Posted by Geta

This government has not cut direct taxes any time in the last 7 years, worse, personal IT slabs have not even been adjusted to inflation for the higher slabs. They have actually taken away many provisions of saving IT by the salaried class. Whatever the minimal tax cuts are for the lowest slabs, who hardly pay any tax even otherwise. This was a regressive step as tax base needs to be widened.

Well, I believe we are talking about the Corporate tax reduction in 2019 in this thread, which was massive and is a direct tax cut, so I am not sure this is true.

As regards to other points, not really clear if you want more indirect taxes, but thats fine. From your earlier post, I sensed that your primary issue is social security when/if the "current IT payers" lose their job/retire. If that is the concern, Indirect tax is only going to worsen the situation for "current IT payers" when they retire/lose their job.

Mods, I couldn't edit previous post for some reason, apologies for back to back posts.

[Geta]

Originally Posted by ashokrajagopal

Well, I believe we are talking about the Corporate tax reduction in 2019 in this thread, which was massive and is a direct tax cut, so I am not sure this is true.

As regards to other points, not really clear if you want more indirect taxes, but thats fine. From your earlier post, I sensed that your primary issue is social security when/if the "current IT payers" lose their job/retire. If that is the concern, Indirect tax is only going to worsen the situation for "current IT payers" when they retire/lose their job.

Mods, I couldn't edit previous post for some reason, apologies for back to back posts.

The corporate tax reduction was bound to happen if India wants to become a manufacturing hub. Corporates are here for doing business. They are not here to give subsidies for a billion people.

[Ankur@VNS]

Originally Posted by ashokrajagopal

For instance, Corporate tax projected for 2021-2022 as per the Budget is 5.47L Crore.
This is smaller than 5.71 L crore, which is the actual amount collected in 2017. That's Corporate tax revenue from 4 years ago.

GST is tax paid by buyer. Corporates do not provide GST. Government decides to tax consumer and consumers pay. Government decides not to tax consumer, then consumers wont pay. Attributing GST to corporates who are buyers is not correct.

The above mentioned contention really goes to heart of this very discussion.

A major reason for the central government implementing a high excise duty on petrol and diesel, lies in the fact that the government’s tax revenues as a proportion of the size of the Indian economy, measured by the gross domestic product (GDP), has been falling over the years.




Adam smith's basic premise of taxation (canons of taxation) warns against overly reliance on indirect taxation, because it hits the poorest, the most. It is unfortunate that every short fall of revenue collection has been compensated with proportionate hike in excise duties/VAT by respective governments.

In the last couple of years, the central government has become overly dependent on the central excise duty that it earns on the sale of petroleum products (primarily petrol and diesel). In 2014-15, the central government had earned Rs 99,068 crore from this. This jumped to Rs 2.23 lakh crore in 2019-20. It jumped to an all-time high of Rs 3.72 lakh crore in 2020-21.

This compensates for the massive fall in corporate tax or the income tax paid on corporate profit. This had stood at Rs 5.56 lakh crore in 2019-20. In 2020-21, it fell to Rs 4.46 lakh crore, a drop of about massive 20%. This happened because in September 2019, the government reduced the base rate of corporate tax to 22%, from the earlier 30%. Hence, the collections of corporate taxes fell in 2020-21, despite the massive increase in profits of listed corporates during the year.



There is no free lunch in economics. The costs of a fall in corporate tax collections and weaker than expected GST collections, are being borne by everyone who buys petrol and diesel in a direct way. In an indirect way, we are paying for it in the form of higher inflation because of regressive tax structure as warned by Adam smith.

This is why the central government cannot reduce excise duty on petrol and diesel. Their finances have become too reliant on the revenue generated by the excise duty on petrol and diesel.

If anyone does analysis of fuel prices then he would notice where the devil lives. In case of petrol, the dealer price forms 39.8% of the retail price of petrol. The rest are largely taxes, imposed both by the central government and the state government. The taxes added up to 56.4% of the retail selling price.
(per litre of petrol in Delhi as of July 1.)

Along similar lines, the dealer price makes for 46.8% of the retail price of diesel. The rest are largely taxes. Taxes amount to 141.7% of the dealer price for petrol and 107.3% of the dealer price for diesel. So, taxes form a significant portion of the price of petrol and diesel.



The historical price break down charts below contains prices in the month of May every year. Although, it does not capture every price point over the last eight years but is still a good representative of the overall trend. A look at the below charts tells us very clearly, the central government taxes on petrol have gone up over the years, from Rs 10.39 per litre in May 2014 to Rs 32.90 per litre in May 2021. This is a jump of around 217%. The state government value added tax in Delhi has also gone up from Rs 11.90 per litre to Rs 21.81 per litre, a jump of around 83%.

Clearly, taxes on petrol, more at the central government level than the level of state governments, have gone up over the years, and this has pushed up the retail selling price.




The price of international crude oil is the most crucial factor for disruption. India produces very little oil of its own. In fact, the overall import dependency in April-May this year was at 85.4%. We are heavily dependent on oil imports. Hence, if price of oil goes up internationally, the price of petrol and diesel also go up within the country.

In April 2020, the average price of the Indian basket of crude oil had fallen to $19.9 per barrel. But since then, it started heating up, and till April 2021, it averaged at $71.98 per barrel. As of July 21, it had risen up to $74.97 per barrel.

As, it is generally said, that, don’t dance with devil, because you become clueless with no other option left, once the devil starts dancing with you.

If the ongoing friction within OPEC nations (UAE vs Saudi Arabia) continues, then chances of further shooting up Crude Oil Prices, can't be ruled out.

May GOD kind to us.



(CREDIT to Mr. Vivek Kaul's blog : https://vivekkaul.com/2021/07/14/wha...diesel-prices/)

[gauravdgr8]

Originally Posted by anb

Actually we should be happy, not frustrated. In order to become a tax paying citizen, one need to earn more than Rs.40000 per month. Less than 10 % Indians earn more than Rs 40000 per month. We should be lucky to be part of that minority. Two-third of the population (68.8%) of India leave under poverty as they earn less 2 dollars per day.

Your arguments are far away from reality. There are not hundreds but a couple hundred thousands in the country that evade taxes. Have a look at the below:

https://www.tribuneindia.com/news/na...k-money-173209

https://www.zoomnews.in/en/news-deta...gst-probe.html

These small business owners flourish in every city and since there is no proper accounting they are scott free. Simply imagine even if an additional 25-30,000 cr. is generated as income tax collection, what impact it would have on the economy every year

[anb]

Originally Posted by gauravdgr8

Your arguments are far away from reality. There are not hundreds but a couple hundred thousands in the country that evade taxes. Have a look at the below:

https://www.tribuneindia.com/news/na...k-money-173209

https://www.zoomnews.in/en/news-deta...gst-probe.html

These small business owners flourish in every city and since there is no proper accounting they are scott free. Simply imagine even if an additional 25-30,000 cr. is generated as income tax collection, what impact it would have on the economy every year

Two-third of the population (68.8%) of India leave under poverty as they earn less 2 dollars per day. This was taken from a reputed SCI indexed journal which has more credibility than some news website which publishes news like 2000 rupees note has chip.

link of the Journal : http://sersc.org/journals/index.php/...cle/view/25356