Tuesday, July 7, 2009

Abolish Income Tax

One of the advantages I have as a blogger over the Finance Minister of India, is that I can come up with outrageous suggestions. Like this one ...

The expected revenue from Income Tax is 9% of the total government income. I do not know how much the Income Tax department spends to get this 9%. I was wondering if the Income Tax can be abolished all together. Instead increase taxes on non-essential, luxury items. Believe me the economy will boom like it has never before. Some money will go into buying luxury items; the rest will go into savings and investment. And I do believe that the government will more than recover the 9% lost out. Actually this may even wipe out the 38% debt (of the total expected income for this financial year) the government is under.

Now that is not really outrageous, is it?

Economists may argue that this will lead to a spiraling inflation. Will it, really?

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Gautam said...

i think its a gr8 suggestion..this may also lead to the poorer becoming richer and the richer becoming poorer..hehe

Amitabh Mukherjee said...

Actually, taxes are the instrument to take from the rich and give it to the poor. At least it is meant to be like that. However, the real rich do not pay taxes. It is only the salaried class that faces the brunt. I will be explaining this in my other blog 'Want to be rich?'

Sanoop said...

I think atleast 60% of the salaried professionals go for investments just to save up on the tax factor... Now just in case Income Tax is abolished.. would it make them wiser to still invest for a secure future? and wouldn't all the funds that were generated by those investments be affected?

Amitabh Mukherjee said...

Good point Sanoop.
However, you must realize that all tax saving schemes are low risk, low return schemes. So the present tax saving schemes actually take away your right to decide where you wish to invest. And hard luck if the funds suffer. The fund managers have to find out attractive schemes to attract investments.

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