Thursday, November 29, 2012


Taxation and other financial impositions by governments all over the world are borne by the citizens believing that the money so collected goes for developmental activities beneficial to the citizen. But this does not happen, especially in an over democratic country like India where silent tax players never ask the government about lack of development in spite of paying taxes at rates unbearable to many. On top of it natural resources like spectrum, coal etc are distributed at throw away prices creating huge financial scams, depriving the government the much needed financial inputs for various developmental activities. Added to this a small percentage of citizens, that too mostly from the salaried class who pay income tax while a bevy of taxes are "innovated", like sales tax, value added tax, excise duty, import duty, service tax, wealth tax, road tax, property registration fees etc to fleece the citizens. While all these are understandable, what is reprehensible is the tax levied on food and drugs by state governments making them more expensive. How can any one justify taxing a basic food like food grain which is the essential for any human being to lead a normal life. Here is a critique on this subject.

'High taxes, levied by major food grain growing states of Punjab and Haryana, have made the Centre's task of selling wheat at low rates in the open market difficult. The taxes, ranging from 4.7 per cent in Madhya Pradesh to 11.5 per cent in Haryana and still higher at almost 14.5 per cent in Punjab, are incurred by the Centre while procuring grains from farmers every year at a fixed minimum support price (MSP). It is difficult for the Centre not to pass on these taxes to consumers at the time of selling grains in the open market as then its food subsidy burden will further inflate. According to some estimates, around 10 per cent or Rs 7,000 crore of the total food subsidy in 2011-12 was due to state taxes and levies, which the Food Corporation of India (FCI) paid by way of levies and taxes to different states".

Government of India generates inflation index periodically and one is not sure how reliable these figures are. Still a major contributor to inflation is the taxes levied on every conceivable consumer material the government can set its yes on! How can the private vendors and shops can be faulted if they also indulge in raising the prices on their own. Look at the hotel sector which has seen price hikes to the extent of 100% during the last two years as they are not covered by the rule of compulsory MRP declaration. Even those covered under MRP regulations consumers have learned long ago that the MRP declaration does not serve much of a purpose because, till recently, consumer products industry has been practicing fraudulent means in keeping the price line steady but progressively reducing the quantity within a pack! A honest government if it has any consideration for the sufferings of its people must exempt all foods, especially the basic ones, from the purview of punitive taxation!  The excuse that federal government in India cannot prevent the states from imposing tax on foods is just an excuse which the citizens cannot accept.


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