Sunday Posts

All our politics is Politics of Welfare. For, all our difference, between Liberals and Conservatives, the Left and the Right, can be summarised as this: 1. The Liberals want the State to tax those who earn and provide Welfare to those who do not, so that those who earn can keep themselves forever on the treadmill and those who do not can be happy with the handouts, and this should keep everyone off politics. 2. The Conservatives do not want to tax those who earn and do not want to give Welfare to those who do not, so that the former is happy and the latter is on the treadmill, and this should keep everyone off politics. These conversations are so common that one may think this was always the case. However, as we know, politics of welfare is not primordial, but rather an industrial age phenomena. At its core, it assumes that everyone can, and should, be able to find work, and it is either Unfortunate (Liberal) or Criminal (Conservative) not to be able to find work...

Of the life's two great certainties - death and taxes - we have not been doing very well with the latter. For an increasingly squeezed Middle Classes, facing declining real income, uncertain job prospects, costlier health-care and education and the very real possibility of never being able to retire, the fact that the rich does not pay much taxes may occasionally shock, but not paying taxes has indeed become one of the key signals of being rich. The newest metaphor of business - the cloud - is not just about technology, but of de-materialisation of taxes too. Obscure as it may be, the fate of taxes, and its consequence, may be one of the best ways to understand the global economy. Consider the two seemingly opposite conversations trending in the news in the last few weeks. One is that the Indian cabinet is considering imposition of a 'Google Tax', or, more correctly, an 'Equalisation Levy', an uniform charge on revenues made in India for all corporations not h...

Greece proposes to raise the Corporation Tax rates from the current 26% to 28% (and possibly to 29%, if needed) in the plans submitted to its various creditors, alongside other measures such as tax rises and pension savings. This immediately draws the usual complaints - that businesses would have less money to invest and create jobs - and makes an interesting contrast with the UK, where the Chancellor has proposed a reduction of Corporate Tax rates, all the way down to 18% by 2019. The rationale presented is simple - that this would attract businesses and create jobs. Both countries are technically in austerity, though in completely different economic positions. Though the welfare cuts in UK were no less severe than those proposed by the Greeks, the two countries are taking two different lines as far as businesses are concerned. Greeks are proposing to raise corporation tax - something that is completely out of fashion at this day and age - while UK is trying to become, almost, a tax...

The Finance Minister of India, Pranab Mukherjee , released yesterday a draft tax code, which is expected to replace India's Income Tax code by the next fiscal year. India's Income Tax code was indeed dated, written in 1960s, and confusing, with too many amendments and exemptions earned by pressure groups riddled all over. The new tax code, Mr. Mukherjee stated, will 'simplify' the matters. Besides, it is expected that this will modernise the India's tax system, and rationalise it for the new Indian economy. It is a revolution in waiting, indeed. Consider the changes it proposes in personal income tax. Today, a tax payer pays tax of 10% once he [there is a different slab for women] crosses Rs. 160,000 in income. This applies up to Rs. 300,000, above which, and up to Rs. 500,000, one has to pay 20%. They have to pay 30% on anything above Rs. 500,000. Besides, there are a number of surcharges, completely irrational levies that the government puts in ad hoc , on to...