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27 Mar 2005 Government levies taxes at various levels to collect revenue. Then the Government gives concessions for certain consumables. This method does involve multiple expenditure. Offering subsidy for certain items may be useful in diverting peoples' attention for more difficult problems. However, it is not a complete solution for any of the problems faced by the people. This may be a star question in legislative houses for fight over subsidies and show general public the efforts made by them to keep prices down. People must understand that subsidy means only transfer of price rise from one of the items to others items. Even if the items selected for higher taxes may appear to be consumed by the rich, the final burden is on the common man. The rich always find ways and means to transfer the additional burden on the large section of the society. This may be in terms of corruption or artificially creating shortages and increasing prices of commonly consumed goods and articles. There is a need to reduce this expenditure. This can be done on proper study and investigations of tax, levies and subsidies. Section of population targeted for making available goods at lower rates is people below poverty line and farmers (There is a need to exclude rich farmers from this concession). Firstly, a survey should be undertaken to find the goods this section of population consumes and also quantity per head. This should be compared with the overall per head consumption in the country. Per capita consumption so found should be compared. There would be certain commodities where over all per capita consumption is substantially lower than the per capita consumption by the targeted people. Such articles need not be taxed. Further, raw material used for such products should be studied. Taxes on these need not be levied if substantial portion of raw material is consumed in producing goods for sole (or large proportion) by the people under consideration. This way at least there will be saving on tax collection and necessity of subsidy may not arise. Second aspect is production cost. As on today, considerable efforts are made to keep cost low. However, it is significant only where there is a competition. In automobile industry there is a competition and no efforts are needed by the Government to control prices. Similar situation need to be developed in all spheres of production. Wherever, competition does not exist Government should put artificial restrictions on goods to create atmosphere of competition. Manufacturers may be given target price and time period to achieve it. This method of improving productivity and maintaining affordable price should work for benefit of producers and consumers. |
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