The Indian connection
Sir — The sudden media obsession with Liz Hurley and her “affair” with Arun Nayar appears a little over the top (“War hot, Liz in Mumbai hotter”, March 31). The note of incredulity in the Indian reports is perhaps understandable — after all the liaison between an international model (whose principal claim to fame is to have worn a dress made of safety-pins) and an Indian millionnaire (the German mother does spoil the picture a bit) has all the piquant appeal of a gora mem-brown man romance, a shoddy kind of Empire strikes back. But why are the British newspapers so worked up' Is it the “impossibility” of the affair that excites their interest too' Yet there have been numerous such connections, most notably the marriage of Imran Khan and Jemima Goldsmith. Or does the more plausible reason lie elsewhere ' Are the tabloids looking for some relief from the harshnesses of war' And should we call that the height of optimism'
J.L. Bhattacharya, Calcutta
Sir —The editorial, “Drug abuse” (March 28), condemns the March 25 strike by chemists as adding “a new and dangerous dimension to the cult of protest-mongering”. Essential services like hospitals and drug shops must be kept out of the purview of bandhs. Value-added tax has been successfully implemented in 120 countries but that does not mean it will be successful in India too. It may be the bane of consumers who will be hit because businessmen will pass the enhanced tax on them. Medicines are already beyond the means of many people in India — not to speak of the poor. The sellers’ only grievance is that maintaining separate accounts will prove cumbersome. It bodes ill for the economy that not only does the bandhs culture show no signs of abating, but traders, petroleum dealers, bus owners, and many others are calling bandhs more frequently.
VAT may also encourage further tax evasion by drug-sellers who usually do not issue cash-memos to customers. VAT may turn out to be messy in the long run and it is doubtful whether it will help state governments mobilize additional resources.
Tarakdas Majumder, Calcutta
Sir — Some aspects of VAT need to be reconsidered. The spirit behind VAT is to make all transactions accountable, not to make criminals of businessmen. Not that all penal provisions of VAT should be done away with, but provisions like the commandeering of business premises by tax authorities for “on site audit”, minimum fine of Rs 2 lakh, imprisonment and a six months deposit if the liquidity crunch continues, could all be reviewed and toned down.
VAT can benefit the common man in another way. Sales tax evaded every year in the city of Delhi alone, even by conservative estimates, is Rs 4,000 crore. For the entire country, the figure could be as high as Rs 70,000 crore. VAT will plug much of this revenue leak and increase government revenues. Thus, indirectly, VAT could help bring down the tax rate itself! It will also correct another aberration — in a country of more than a billion people, only 10,000 have declared incomes of above Rs 10 lakh.
N. Narasimhan, Bangalore
Sir — The West Bengal government should welcome the Supreme Court verdict plugging sales tax evasion by traders and transporters. I am from Calcutta and feel distressed to see how the city and state have fallen behind in basic facilities for lack of funds — the result of poor collection of revenues. Water tax can only be a small step in augmenting revenues; it is by thorough enforcement of sales and other taxes that the state’s income can be raised. The added revenue can be used to improve, repair and maintain our roads and highways as also build new ones. West Bengal collects Rs 5,000 crore in sales tax every year, and this could be raised substantially if the act is enforced.
S. Law, Ohio
Sir — Excise duty of 8 per cent, with Central VAT credit facility, has been imposed in the budget on refined edible oil. But only 6 per cent of edible oil consumed is branded and packaged, and thus taxed. The balance comes from the unorganized sector.
The Union government promulgated the edible oils packaging (regulation) order, 1998, in the wake of the dropsy deaths caused by adulterated mustard oil in Delhi. The government then wanted to ensure hygienic products were available to consumers. But a high excise duty may actually encourage adulteration. Branded refined edible oils and vanaspati sold in containers would attract excise duty, while goods sold in barrels and tankers would escape the duty net. The excise duty on packed refined oil would thus encourage its sale in loose form. Branded flour, bread, spices, butter, cheese, processed foods are exempt from excise duty, and thus a different treatment for vanaspati is unjustified
Sunil Rampuria, Siliguri
Sir — VAT has raised the hackles of traders everywhere. The coffers of state governments are empty but instead of exploring other means to generate revenues or reducing administrative costs, the Centre has chosen the easy route of imposing VAT. This decision will only lead to more red tape all around. This is why traders are annoyed with the tax. They are not worried about any increase in prices, which will be passed on to consumers. Also, VAT will only benefit states with more industries.
Instead, sales tax should be collected at the manufacturing point and pooled into a Central account. These taxes should then be divided among the states on the basis of dispatch registers which would ascertain the number of products sold there. It is always easier to check evasion at one point. In this way, the bother of collecting sales tax from traders and end-users could also be avoided. Also, this tax should be same all over India.
Govind Das Dujari, Calcutta
Sir — A resident of Australia for over 33 years, I am a frequent visitor to Calcutta. I find it difficult to understanding the raison d’etre for VAT. Pavements in Calcutta are dug up but never restored, people still use ration cards but all commodities are available in the market. Do all businessmen have to register because of VAT' I fail to see how this will help the common people.
M. Richard, Sydney