PRICING AND TAXATION POLICY – FOR FUELS AND OTHER ENABLERS & Auctioning of National Resources.

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Hilights


Money, Finance & Taxation,Public Arena

Summary:

Pricing of Public Resources for sale or lease to Private Parties should be vide a proper auction process that protects the interests of the Public. Taxation should be fair, comprehensive and equitable.

All Goods and Services are not the same. Some are Enablers whose consumption enables greater production of other Goods which in turn lead to additional GST. Such Enablers need to be looked at, taxed or auctioned differently.

Highlights:

  • Public resources should only be for the benefit of the Public and if allocated or auctioned to any Party, the method should protect the interest of the Public.
  • The concept of ‘Enablers’ should be understood and all Enablers should be taxed differently from other Goods and Services.

Quotations for consideration:

  • “If you drive a car, I’ll tax the street. If you try to sit, I’ll tax your seat. If you get too cold, I’ll tax the heat. If you take a walk, I’ll tax your feet.” – George Harrison… on the attitude of a Tax man.
  • “Governments view of the economy… If it moves tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” – Ronald Reagan.
  • “In general, the art of Government consists of taking as much money as possible from one party of citizens to give to the other” – Voltaire.
  • “Public policy should not be designed to advance moral instincts that we all reject every day of our lives” – Steven E. Landsburg
  • “A Government big enough to give you everything you want is strong enough to take everything you have.” – Thomas Jefferson.
  • “I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself by the handle.” – Winston Churchill.
  • “Government cannot make a man richer, but it can make him poorer.” – Ludwig Von Mises.
  • “Any politician who starts shouting election – year demagoguery about the rich and poor should be asked ‘What about the other 90% of the people.” – Thomas Sowell.
  • “Your moral judgments are valid only if they are divorced from self-interest. Is there a moral imperative to tax the rich and give to the poor? The motives of both the rich, who say no, and the poor, who say yes, are questionable… all moral codes (are) variations on a single theme, ‘don’t treat other people too badly’… charity is entirely a personal decision.” – Steven E. Landsburg

KEY CONCEPTS:

  • Objective of Taxation:

It should be the aim of any Government to arrive at a pricing and taxation policy for all Goods and Services that takes into account the difference in the nature and purpose of each and, is directed so as to equitably deliver the maximum benefit to the public and, not just to generate the maximum, immediate or short-term, tax revenues to the Government, even if it then claims to use such revenues only for public good. A benefit that can accrue to the public directly is far more equitable and effective than that which is first pooled into the Government’s ‘sticky’ hands and then re-distributed. The Government’s need for tax, like its bureaucracy, will otherwise be ever growing and there exists a strong and undesirable correlation between them.

A benefit that can accrue to the public directly is far more equitable and effective than that which is first pooled into the Government’s ‘sticky’ hands and then re-distributed.

  • Services vs Goods:

Consumers tend to spend relatively less on goods and more on services as their incomes rise. Once people have met their basic needs, they tend to want better medical care, transportation and communication, information, recreation, entertainment, financial and legal advice etc. Services including design, flexibility, innovation and smartness are steadily substituting for materials in our manufacturing, exports and trade.

  • Categorization of Goods and Services:

All types of Good and Services cannot be considered as being similar. They fall under three categories. The first category includes those that are consumed or used as end or final products itself divided into ‘staples or essentials’ and others, while the second category includes those that are intermediate products and services consumed in the production of such end products and finally, in the third category are the enablers, those which act as something like catalysts for, or are the essential inputs for, increasing productivity and generating greater employment and thus leading to greater tax collection.

  • Methods of Taxation:

The Goods and Service Tax (GST) system is a very efficient, effective and equitable system for the first and second category of Goods and Services. The more one buys or consumes such items, the more one pays as tax. The rates of such taxation can be used to direct consumption in the appropriate direction in case of addictive and health affecting items which result in a greater burden on society. The tendency to use the tax policy to affect other ‘flavour of the day’ demands (to modifying eating habits or to enforce environmental conditions etc) should be strongly resisted as it may otherwise soon lead to cascading demands for other causes supported by the ever increasing number of self interested groups or NGO’s.

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