Saturday, February 23, 2013

Indian Government on a Looting Spree

As my readers must be knowing, the Indian government is bankrupt and their fiscal deficit is widening rapidly. Government officials are mainly giving a lip-service to budget consolidation and fiscal tightening e.g., on one day they talk about slashing the military budget, and on the next day they warn against slashing defense spending! As I have alluded in past, their main plan is to bridge the deficit via tax increases rather than cutting profligate spending. Following on their plans of taxing the milk cow citizens for filling their own coffers, they have started harassing corporations and individuals. Below are some of the major steps of government's looting spree:
  1. A crack down on taxation of transfers within foreign firms (see here). Under this plan they are now after more than dozen multinational companies. Another news said: "India is aggressively pursuing tax claims against multinational firms operating in the country as the government seeks to rein in its budget deficit, taking particular aim at IT and back-office functions" (see here). Apart from this, they have also raided Nokia India's offices for a possible tax evasion case of $545 million.
  2. Finance minister P. Chidambaram is hinting at taxing the super rich people of India (see here). As per the latest news, P. Chidambaram is planning an 'inheritance tax' and a 'dividend distribution tax' to tax the super rich people (see this). To support his policy of taxing the super rich people he is coming out with all kinds of ridiculous arguments e.g., he said: ""There is an argument that when the government requires more resources, the very rich should willingly pay a little more". Well, best of luck with that Mr. FM.    
  3. Chidambaram is also planning to widen the tax base to increase government revenue (see here). He said: ""I must get more and more people into tax net, even if they pay small amount of taxes. More and more amount of people must pay tax" (see here).
  4. There are talks that P. Chidambaram will try to increase service tax, excise and custom duties (see this).
All these measures show government's desperation. The government thugs need to realize, that the more they will try to tax the people, the more people will try to avoid those taxes as we are already seeing around the world where wealthy French and US nationals are renouncing their citizenship to escape the heavy tax burden. Increasing taxes will never result in higher revenue for the government as recent example of British government demonstrates. And as I have discussed elsewhere, higher taxes will, in the end, kill the Indian economy.