Assam-Over to the Army

50 per cent) is collected from taxes on inputs. The foundations of the incidence studies relied upon for certifying the progressivity of indirect taxes are not all that firm and another, and equally noted, lot of economists tire on record expressing .serious misgivings about the reliability of such studies. Apart from the fact that they seek to measure the burden of the taxes as a percentage of consumption and not income which is a better index of taxable capacity, these exercises suffer from many weaknesses both in their conceptual framework and their data base. The surveys of consumer expenditure which provide the basic information for these estimates tire notoriously deficient in covering the consumption of the rich. Allocation of the tax revenue from different commodities among the different expenditure classes also presents intractable problems. The practice generally has been to allocate the revenue from different items according to the commodity content of the consumption of each ,expenditure group. While this may not be very objection- able in the case of consumer goods, it is not possible to make the allocation in such a straightforward manner in the case of capital and intermediate goods. In the absence of adequate information regarding the input-output co-efficients of the commodities produced in the economy, the allocations are made in a crude and mechanical manner. The ramifications of commodity taxation are much too complex to be captured in such simplistic models.