"Housekeeping ain't no
joke."
-Louisa May Alcott (American,
1832-1888)
Word for the day
Ogdoad n)
The number eight or group of
eight.
(Source: Dictionary.com)
Malice towards
none
Over to Patna!
What da' ya' bring to table?
The Finance Minister said on Wednesday that the government is
finalizing a list of tax exemptions to be phased out as part of the exercise to
reduce corporate tax rate to 25 per cent in four years. He also clarified that
every tax demand cannot be termed as tax terrorism, he said, the government
will not relent on pursuing black money in India or abroad.
To me it implies that in next four years the effective corporate
tax rate may be 10-15% higher than the present effective rate of tax. And it will
be much more difficult to evade or "plan" tax liability.
I am sure it does not sound music to many years.
My interaction with many of these market participants, including
industrialist, traders, brokers, analysts, investors and bankers, in past many
months has underlined a serious dichotomy. The market is asking for something
it does not want – serious economic reforms.
An overwhelming majority of publically traded companies are found
to be direct or indirect beneficiary of (a) the inefficiencies of the
administration; (b) lack of transparency; (c) incongruent policy framework; (d)
unduly supportive politicians; (e) government largesse in form of misdirected
subsidies; and (f) protection from fair competition at the expense of
consumers, etc.
Some real economic reforms, as against administrative and
procedural corrections, could destroy the basic premise behind many large
Indian companies.
The economic reforms often mean transformational changes that not
necessarily lead to immediate rise in corporate profitability and aid in
resource grabbing. On the other hand these usually do lead to lesser
protection, more competition and larger accountability for corporates. If you
do not want to pay taxes, cost of compliance and market linked compensation for
exploitation of natural resources clamoring for economic reforms may not yield
much.
Those clamoring for reforms may want to figure out whether:
(a) Industries and
businesses who have thrived historical on government largesse and not
necessarily on the enterprising abilities of promoters are willing to give back
to society by way higher taxes, higher voluntary CSR spending, technology
upgrade for better resource utilization, etc.;
(b) Regions like Gujarat and
Maharashtra, which are economically more developed despite not being endowed
richly with natural resources, are willing to acknowledge that a part of their
development is due to imperial designs of British regime and share their wealth
with exploited regions like Jharkhand and Odisha.
(c) Caste, communities,
families and individuals which command ownership of the major part of economic
resources and occupy most of the social space, are likely to voluntarily vacate
some space for the historically oppressed and downtrodden.
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