Swarajya, July 31, 1965
The only wonder which eleven years of socialism practised by the Congress Government has produced for the people of India is monstrous taxation, never before suffered by the people, even in the worst periods called tyrannical by historians. Every benefit that the Statist party in power pretends to confer on the people, or any particular group of the people, with a view to securing; thereby their support for its perpetuation in office, is offset by heavy taxes laid on the people.... The Fourth Plan calls for new taxes amounting to Rs. 3,000 crores. This would necessarily fall on the poor and the middle classes, through levies to be added to the cost of commodities and services purchased by them.
All that the present or any other Statist government offers as benefits for the lower levels of the nation are an illusion. The benefits are always offset by concealed taxation. The concealment is now behind a tattered screen as there are opposition parties to expose the reality. The benefits of these five-year plans were real socialist benefit as long as direct taxation of the rich covered the cost of those benefits. But that reached its climax long ago. It is now either indirect taxes of many kinds or paid for out of foreign loans which, according to a Union minister, have already reached “perilous proportions” and which mean heavy additional taxation now or in the next generation, when the poor will be no better off than now.
There is yet another way of concealing tax, which the present Statist administration has been practising. Government reduces the value of the paper money which the poor and middle classes undergoing many privations have managed to save or which they will earn by hard labour in the present and future years. The Government can make new money and adulterate the old money in circulation.
If instead of borrowing heavily from foreign governments we had followed a policy which would have brought the same amount as private capital from abroad, to be invested in privately managed industries in India—private capital would have flowed in plentifully if we had cared to pursue that line— we would have been in a much better position today. Every industry would have flourished under the profit-earning motive and the earnings would have been ploughed back into industrial activities... The question is whether it is now too late to return to common sense. It is not. It is never too late for anything for an undying nation of 450 millions, all intelligent shrewd men and women, with a civilization of which we may be proud.
The only wonder which eleven years of socialism practised by the Congress Government has produced for the people of India is monstrous taxation, never before suffered by the people, even in the worst periods called tyrannical by historians. Every benefit that the Statist party in power pretends to confer on the people, or any particular group of the people, with a view to securing; thereby their support for its perpetuation in office, is offset by heavy taxes laid on the people. In the old monarchic days, kings and tyrants used to pay out of their accumulated gold for conferring any benefits on their subjects during times of crisis. But their successors, the political parties sitting now in authority, have no such resources. They must add to the taxes imposed on the people every year to confer any benefits and for covering the administrative and supervisory expenses in connection with those benefits, and also for what must, in all those cases, necessarily go down the drain. Witness the Fourth Plan, which the Congress Chief Ministers assembled in NDC insist on keeping at the originally planned level even though the Third Plan itself has ended in ‘foreign exchange stringencies’. The Fourth Plan calls for new taxes amounting to Rs. 3,000 crores. This would necessarily fall on the poor and the middle classes, through levies to be added to the cost of commodities and services purchased by them. Here is an extract from the Hindu which, in very restrained language, deals with the extra taxation proposed now:
The tax effort of around Rs. 2,700 crores in the Third Plan, of which the Centre’s share was of the order of Rs. 2,100 crores, being a colossal one, it would be too much to expect that on top of this and in the absence of buoyant conditions in the economy, fresh taxation on almost the same scale could be levied without causing hardship to the people in both the urban and rural areas as most of the new taxes would have to be indirect taxes. (Italics mine).
All that the present or any other Statist government offers as benefits for the lower levels of the nation are an illusion. The benefits are always offset by concealed taxation. The concealment is now behind a tattered screen as there are opposition parties to expose the reality. The benefits of these five-year plans were real socialist benefit as long as direct taxation of the rich covered the cost of those benefits. But that reached its climax long ago. It is now either indirect taxes of many kinds or paid for out of foreign loans which, according to a Union minister, have already reached “perilous proportions” and which mean heavy additional taxation now or in the next generation, when the poor will be no better off than now.
There is yet another way of concealing tax, which the present Statist administration has been practising. Government reduces the value of the paper money which the poor and middle classes undergoing many privations have managed to save or which they will earn by hard labour in the present and future years. The Government can make new money and adulterate the old money in circulation. The trick is the same as the poor milkman adopts when he is forced to do so by reason of the increased cost of maintaining his cow. He adds water to the milk, increasing its quantity without interfering with its colour. An Anandayi Ammal and a Kandaswami of Salem were sentenced to six months and three months hard labour with fines of Rs. 50 and Rs. 100 respectively for selling milk with water added. The dilution of money which honest citizens have saved and deposited with Government or banks or kept with themselves is not less criminal than what these milk vendors were guilty of.
If instead of borrowing heavily from foreign governments we had followed a policy which would have brought the same amount as private capital from abroad, to be invested in privately managed industries in India—private capital would have flowed in plentifully if we had cared to pursue that line— we would have been in a much better position today. Every industry would have flourished under the profit-earning motive and the earnings would have been ploughed back into industrial activities. The people need not have been so heavily taxed. We would have been truly prosperous, instead of hoping that aiding nations can yet save us, by a moratorium, from declaring bankruptcy. And from a condition of national prosperity we could have been truly socialistic, that is, we would have been really able to raise the standard of the poor people’s lives, which twelve years of declared State-socialism has not enabled the Government to achieve. The question is whether it is now too late to return to common sense. It is not. It is never too late for anything for an undying nation of 450 millions, all intelligent shrewd men and women, with a civilization of which we may be proud.
