The Telegraph
Since 1st March, 1999
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Letters to Editor

Occupying only the armchair

Sir — Is Ashok Mitra a Pakistani citizen' He surely is a sympathizer of the country. Why else would he write: “The less said about the exploits of the [Indian] army occupying Jammu and Kashmir, perhaps so much the better”' (“Terror, fiction and myths”, Nov 15)' Does he also think that the instrument of accession was a hoax' Why must brave Indian soldiers die at the border every day for people like Mitra who believe that the Indian army is occupying Jammu and Kashmir' I am a retired army officer. I have fought in the 1971 war with Pakistan in Jammu and Kashmir, faced counter-insurgency in the state and fought at Dras in the Kargil war. I am deeply disappointed and saddened that we risked our lives so that intellectuals like Mitra could have a good night’s sleep and get paid for writing that the Indian army is occupying Jammu and Kashmir. Armchair intellectualism is one thing and facing the reality, and bullets, is another. Got that, Mr Mitra'

Yours faithfully,
S.K. Raychaudhuri, Calcutta

Lesser common good

Sir — The Vijay Kelkar committee’s report on direct and indirect taxes contains several pathbreaking recommendations (“Tax relief to commoners get priority”, Nov 2). It has, however, some lacunae too.

Its recommendation to reduce turnover limit to Rs 50 lakh (currently Rs 100 lakh), beyond which the excise duty becomes payable, hurts the small industries sector. Besides, since value-added taxes will soon replace Central excise duty, the committee need not have touched on this aspect at all.

Kelkar’s recommendation to eliminate different rates of duty for intermediary goods and finished goods will go a long way in reducing corruption in customs. But it would have done better to cite the example of Chile, where the introduction of a single slab of 11 per cent customs duty with no exemption has virtually eliminated customs corruption in a severely corruption-ridden country. As a bonus, the bold fiscal decision has also made goods produced in Chile more competitive.

It is useless to abolish capital gains only on equity investments when the entire concept of capital gains merits abolition. Every other country in the world except Malaysia and India has abolished it.

Insofar as income tax is concerned, Kelkar fails to recognize that what is important is not increasing the number of assessees, but ensuring that concealment of income by members of the high-income group does not worsen. For example, while the “one in six” rule has swelled the number of assessees to around 35 million, the number of people declaring incomes of Rs 10 lakh or more has declined from a mere 50,000 two years ago, to around 40,000 last year in India’s billion-plus population.

The absence of any social security for the taxpayer in India, unlike in the West, is the biggest disincentive for people. Even a person who pays Rs 1 crore in taxes a year has nothing to fall back upon if he runs out of luck and is unable to sustain himself. Keeping this in view, T.A. Pai suggested four decades ago that instead of income tax, people should be asked to deposit 25 per cent of their income (as assessed by them) with the government, to be returned to them without interest, at the end of five years. If only Kelkar had shown some initiative of this kind.

Yours faithfully,
N. Narasimhan, Bangalore

Sir — The Vijay Kelkar committee’s proposals on changes in the income tax structure has only exposed the double standards of the government. Right from the days of P.V. Narasimha Rao to Atal Bihari Vajpayee, successive governments have claimed that economic growth will not be at the cost of social justice. But each assurance has proved to be a farce. Even after more than five decades of independence, India does not have a social security net in place. The minimum healthcare facility is still a distant dream for the common man. The fixed and lower income groups, already badly hit by interest rate cuts in small savings, will be crippled by the proposed measures.

Increased cash flow can be better ensured if the government enforces the existing tax laws more efficiently, cuts down on its own flab and checks misappropriation of public funds. The proposals may help the corporate sector, but will be of little use to the average citizen because they do not talk about widening the tax base.

Yours faithfully,
Abhijit Roy, Jamshedpur

Sir — It is indeed time for the Indian tax structure to be simplified, so that it does not remain a nightmare of form-filling and tiffs with tax-collectors.

The implementation of Kelkar’s report will never be possible if members of Parliament and state legislators are allowed to enjoy huge tax-free perquisites. In a democracy, taxes should be applied to ruler and ruled alike.

The reported insistence of the Kelkar committee that the report be implemented in totality is unlikely to be accepted. It will probably meet the same fate as the Nicholas Kaldor report of 40 years ago, when the government ignored the valuable suggestions and only selectively implemented the revenue-raising ones.

Unless politicians and bureaucrats realize that resource mobilization is not the sole objective of government, but its creative utilization for fulfilling the basic functions of the state, tax reforms will not succeed.

Yours faithfully,
M.R. Pai, Mumbai

Sir — In a country like India where rich farmers happen to bring home bushels of money selling their produce, it does not make sense to oppose the levying of tax on agricultural income. The bitter fact is that corrupt people in high places mostly use non-taxable agricultural income to bring unaccounted money to book. But since a lot of such unscrupulous people turn out to be politicians, there is little chance that the proposal will get past the Om Prakash Chautalas.

Yours faithfully,
Madhu Agrawal, Dariba

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