Limits Of Taxation

Like the attempts of scientists of old to devise a machine for perpetual motion, the plan to make India prosperous on the foundation of gigantic loans from abroad is an illusion. No prosperity can be achieved without our own hard work of all kinds, intellectual and physical. And this work cannot be obtained except through one or the other of two alternatives: either compulsion under the dictation of a powerful tyranny, or strong incentives based on human nature as established from time immemorial.

     If we dislike and do not want tyrannous compulsion by dictators, there must be the incentive of adequate profit to the individual. The benefit derived from the work may be shared with the State, that is, with those who have not put in a share in that work, but what one gets for oneself and one’s dependents must be such a dominant share as to keep up the motive for work in full strength. If the fraction to be given up to the State is so great as to cut too largely into the motive for work, it will affect production itself; and national prosperity will suffer instead of benefiting by the taxes levied.

     This is a simple truth but it is not always kept in mind. The ambition to appear to have achieved big things leads to a confusion of the understanding and to the levy of taxation beyond the boundary line that wisdom would dictate. Power enjoyed for long causes disorder of the reasoning mechanism in the human brain. The Gita in Chapter II verses 62 and 63, gives the sequence in detail. From contemplation of aims arises attachment, and from attachment desire. From desire issues anger when met with opposition; and from anger arises illusions and confusion of understanding, and consequent deterioration of the reasoning faculty itself. To what the Gita has comprehensively laid down, Kautilya’s aphorism adds: Power verily puts the mind into disorder: ba/am hi chittam vikaroti.

     The megalomaniac plans of Sri Nehru have led, among other things, to crushing taxation. There may be no power left in the people to revolt, but production suffers automatically by a law of nature that does not obey the ambition of dictators, but follows its own course.

“The Congress Party, as now led, stands for a system where all real political and economic power and all responsibility is increasingly concentrated in the hands of a party in office. This has resulted in a tyrannical regulation of national life through controls, permits and licences, progressively denying opportunities to the people to participate in the country’s economic development. It has meant heavy and oppressive taxes and higher and yet higher prices. It has meant reckless and wasteful expenditure, spiralling inflation and black-markets. A reduction in even the miserable standard of subsistence of the people in order to make possible indulgence in wasteful projects marked by gigantism is inherent in the Planning of the party in power. It has sacrificed the immediate interests of the common man to near-communist Planning by subordinating his interests to spectacular long-term projects. It has, by its erroneous policy of puffing citizens at the mercy of officials, ministers and party bosses, fostered widespread corruption resulting in the breakdown of moral values.” (From the manifesto of the Swatantra Party).

     The Swatantra Party, therefore, says in its manifesto:

The party will enforce a drastic reduction in the present excessive burden of taxes which hampers production and employment, including interalia the reorganization and reform of the Sales Tax so as to minimize harassment and bring it in harmony with the conditions of the small traders in our country. A reduction in indirect taxation will bring down the price of commodities in daily use by the people. Direct taxes will be so regulated as to release the creative genius of our people for productive purposes which will meet the country’s needs and raise its level of prosperity. Through such policies alone would the real income and standard of life of the bulk of the peasantry and agricultural labour in the villages and the middle and working classes in the cities which have been stagnating throughout the past decade be enabled to rise. The energies of the Indian people cannot be harnessed in furtherance of the policy embodied in the current pattern of Planning which sanctifies misery in the name of progress and tries to build the uncertain prosperity of a distant future on the privations of today, a policy which has been borrowed from countries under totalitarian dictatorship.

     It is no use imagining that what is being reported as being achieved in communist countries could be achieved in India without putting into motion all the tyrannies which in those countries have produced the alleged result.

     If and when the nation finds that it has gone too far with these Plans and suffered too great miseries in that behalf, the people will have to surrender to communism and to the compulsion and tyrannies of that order. Thus will International Communism achieve its purpose in South Asia including India.

     If the better sense of our people detests this likely culmination and desires to avert it, there is sufficient indication now as to what action people should take at the time of the next elections, when a protest in an adequate measure must be lodged against this policy of over-taxation, reckless loans, and lowering of the value of the rupee. It is a fallacious argument to ask, “Can we dispense with all taxation, can we get on without any plan at all, can we put our economy right without any borrowing whatsoever? No one asks for such extreme measures. What the Swatantra Party wants is sound moderation in all these matters. Folly cannot be justified by the fallacious argument that, as nations must tax themselves and must borrow in wise measure, they may discard all limits as is now being done.