Swarajya, April 13, 1963
The classic books on Rajaneeti give advice: “Levy tax as the honey-bee takes nectar from the flower.” That limit is long past. We have crossed this ancient advisory limit long, long ago. We must now respect at least the natural limit which carries its own sanction as all natural laws do.
Taxation is not just book-keeping arithmetic. It is the science of incentives for production, overlaid with the science of looking after those who have to be cared for at public expense. The former element should not be forgotten in the enthusiasm for the latter. And in respect of the latter, it should always be remembered that a large part of “hard-earned” tax money goes down the drain in administration, and does not serve the poor.
Incentives for work and the worry involved in production are fading away on account of this heavy rate of taxation. And without work and worry, kept at white heat, how can a nation like ours hope to rise?
The US News and World Report of April 8 carries on cover-top an interesting caption: “Is taxpayers’ revolt brewing?” The article itself begins with the following introduction:
“The mood of the American taxpayer is causing real worry in Washington. The reason: That mood is even angrier than usual at this time of the year. New irritations are aggravating old grudges. Officials listening to the rising storm of protests, begin to wonder: is real trouble building up for the US system of taxation?”
This is American English but it can be easily understood. The situation created by this year’s Budget is not less serious in India. But unlike Washington, Delhi perhaps is not worried. Let it not be thought that there are no limits to taxation. The classic books on Rajaneeti give advice: “Levy tax as the honey-bee takes nectar from the flower.” That limit is long past. We have crossed this ancient advisory limit long, long ago. We must now respect at least the natural limit which carries its own sanction as all natural laws do.
Sri V. K. Krishna Menon pointed out that there was no social or financial justification for a large part of the new imports and that more than half the new burden will bear heavily on the poor. Bijoynand Patnaik, another important friend of the ruling regime, said when he was in the mood and interested in speaking the truth, that it was a “savage” Budget. Why, the Finance Minister himself has said nobody anywhere in the world has inflicted such burdens as he proposed to inflict! Unless this was utterly unjustified and foolish vain-glory, it was also a self-criticism of the Budget. Confessions do not absolve crimes— when they are persisted in.
Let alone the bee and the honey: let alone Parkinson whose definite opinion about income-tax is that it should in no case exceed 25 per cent: the Chairman of the Ways and Means Committee of the US Congress thinks that the maximum income-tax should in that country be immediately reduced to 45 per cent. Taxation is not just book-keeping arithmetic. It is the science of incentives for production, overlaid with the science of looking after those who have to be cared for at public expense. The former element should not be forgotten in the enthusiasm for the latter. And in respect of the latter, it should always be remembered that a large part of “hard-earned” tax money goes down the drain in administration and does not serve the poor. The income-tax collected at higher levels in India ranges from 50 per cent to 75 per cent. Adding certain other levies, it is complained that some people have to pay more than 100 per cent. There are, again, certain demands which assesses must meet, which are as peremptory as tax demands and which are not deducted under the Income-tax law. Incentives for work and the worry involved in production are fading away on account of this heavy rate of taxation. And without work and worry kept at white heat how can a nation like ours hope to rise?
The British Chancellor of the Exchequer has announced £ 270 million tax reliefs in order to “get expansion under way”. Tax free allowances will be increased and 3¾ million people in the lowest income bracket will be free from paying any income-tax at all. A controversial property tax levied on the value of the property and unrelated to income and capital (which our governments are trying to copy) is to be abolished, costing the Treasury £ 48 millions a year. Death duty exemption limit is raised from £ 4,000 to £ 5,000. It is estimated that 12,000 estates will get exempted and 17,000 more will get some relief. Let us remember also that Britain is not free from high defence expenditure. But British statesmen know how to do it. They remember that expansion of industries is as necessary as defence expenditure and that crushing the spirit of the middle classes and poor people at a critical moment is not the way to build up defence.
