ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Infinite Majesty, Infinite Infamy

will have to stay for some while. That is still no reason why tax rates cannot be raised at the higher ranges of income and some concessions, generous in the extreme, cannot be lopped off. And will it really take much ingenuity to increase substantially the yield from corporation tax, for instance, by slapping a levy on dividends and raising the standard rate by 5 or 10 percentage points, while once again coming down heavily on deductibles currently enjoyed under various pretexts? The comfortably placed have not minded the extra impost on cars; they may nonetheless howl if the government were to propose a package of direct tax measures which takes away five or six thousand crore from out of their income. It will be less than prudent to pay too much attention to their shrieks of protest. Their living standards will be barely affected by the proposed imposts; the only significant consequence could be an abatement of the frenzy in the share markets. Ponderous editorials may of course be written on behalf of the rich, how such stiff doses of taxation are contrary to the spirit of economic liberalisation. Taxation policy has however little to do with liberalisation. Nowhere in the north American continent or in west Europe are companies accorded such kid- glove treatment in taxation matters as over here; just note the contrast between the magnitude of average retained profits after tax here with rates and trends in the advanced industrial countries. Direct tax rates were in fact reduced by the ministry of finance in the seventies on the basis of a specific hypothesis, namely, that lowered rates yield more than proportionate returns. The hypothesis has remained un- proven. Meanwhile, the government has gifted away thousands and thousands of crore of potential revenues to a small number of the lucky rich, who have, in the process, become both luckier and richer.

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