Key Concepts

1. The slogan ‘Jai Jawan! Jai Kisan! Raised by Prime Minister Shri Lal Bahadur Shastri, rightly extols the protection and security offered by the Jawan to allow the Kisan to safely grow his crops and be a wealth producer for the Country. This slogan however, does not recognize the Entrepreneur/ Industrialist as also, a wealth creator for the Country. Such recognition is long overdue and the slogan should now be: ‘Jai Jawan! Jai Kisan! Jai Udyogan!’ -As even Prime Minister Shastri himself would agree as he had said later that the Businessman has an “… even greater role than that of an Economist and the Politician. Too often, the Community (wrongly) views the businessman’s aim as only selfish gain.”
2. Taxation to the extent of enabling the government to provide essential services is necessary but to be equitable its burden must fall on all pro-portionately, every citizen should feel proud that he/she too is a taxpayer and a contributor to the economic growth of the Nation.
3. In ancient times the tax collected was generally one eighth or one sixth of the produce or revenue and the task of collection was quite an onerous task for the tax-collector. It was increased to one fourth or even more during Wars or due to the greed of the despots. Ofcourse, such increased collections could never be sustained for long.
4. Such levels of Taxation were universal even across all types of Governments (even in Communist Countries where there was no official Tax, once the Costs and Privileges of the Party bosses that burdened the populace, were properly accounted for), as noted by economists studying historical systems.
5. However, under the British, the tax rates were taken as high as about 60 percent, resulting in pushing most of the farmers and artisans into extreme poverty compelling them to go as indentured Labour to other British colonies. This also, destroyed the middle class and the prosperity of the Country.
6. The Tax rate should be equitable, as low as practicable, and be broad based, preferably universal so that every citizen can rightfully be proud of being an equitable tax payer and a contributor to the economic growth of the Nation. It should be fixed after considering inputs from all Stake holders, not just the untaxed poor, who in a Democracy have more votes and have a greater say. (See Annexure – I below, for an interesting tale of what happens when the low earning majority seeks to demand more from the wealth creating and high earning tiny minority-the story of the Ants and the Grass Hoppers)
7. Public services must be made fee – based in a transparent and rational manner. This would eliminate the need to subsidize it all through taxation, thus leaving the State enough revenues to invest in such services as cannot be fee- based. e.g. Defence, Police, Legislative and some elements of Government and Judiciary.
8. Exemptions, Waivers, Subsidies and Doles for votes soon reach impractical levels and cause the collapse of the system, as happened to the Roman Empire and recently to Venezuela. There can never be a ‘Free lunch’ as ‘Free’ ends up too costly.

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