Thursday, June 20, 2019

Tax vanity

Some food for thought
"Our duty is to encourage every one in his struggle to live up to his own highest idea, and strive at the same time to make the ideal as near as possible to the Truth."
—Swami Vivekanand (Indian Philosopher, 1863-1902)
Word for the day
Epiphonema (n)
A sentence that is an exclamation, a general or striking comment, or a succinct summary of what has previously been said.
 
First thought this morning
Many people have taken strong exception to the chanting of religious and other slogans associated with our independence struggle on the floor of the Parliament. They have usually been critical of BJP, enjoying a dominant majority in the lower house, for its inability to protect the secular credentials.
I believe these people are living in denial. They are choosing to ignore the fact that just one month ago, these members of the Parliament have been elected by majority support using these very slogans only. Expecting them to stop shouting these slogans would actually be naive. Honoring the democratic traditions, the will of the majority must be accepted as the law of the land.
We, the people of India, have unambiguously expressed our priorities. If the Parliament and State assemblies are functioning as per the priorities set by us, there should not be any complaints.
On a more fundamental note, I would reiterate that the government must work to remove the terms "secular" and "socialist" from the preamble of our constitution. Let there be clearly marked "Right" and "Left" politics in the country so that the people can chose between Bread and Moon (Roti aur Chaand). These degenerated socialists and pseudo secularists have already done tremendous harm to the elementary fabric of our society.
Chart of the day
 
Tax vanity
Many people reportedly bought tickets for over hyped India-Pakistan ICC World Cup 2019 encounter in black market paying as high as £1000 per ticket. Add to this another £1500 for VISA fee, economy class return airfare, 2night stay in London. This comes to staggering £2500 (INR 2,20,000) per person for watching a match with a 6th ranked ODI team in world - which has not been playing good cricket for two years; comprises mostly inexperienced & inconsistent cricketers; and belongs to a country widely perceived to be an enemy. Moreover, as per the available weather forecast there was only a 50% chance of a full match being played.
Thankfully match happened and India won decisively as expected. However, if we ignore the fun on the sidelines (drums, bhangra and nationalistic fervor) the cricket was lacking from both sides. Virat Kohli gave himself out despite umpire saying not out. Rohit Sharma gave two run out chances. Dhoni played a poor shot to get out in a hurry. Bhumrah bowled below par. Bhuvneshwar again raised doubt about his fitness. Entire Pakistan team performed poorly save for some random glimpses of brilliance by Amir and couple of batsman.
This reminds me of the Justin Bieber's Mumbai concert in summer of 2017. People virtually scrambled to pay INR70,000 for each concert ticket; travelled to New Mumbai stadium, and waited for many hours in hot and humid weather for a pop singer to come and lip sing a few of his popular songs, easily available for free download on internet.
I see three bothersome trends in these events:
(a)   Income inequalities in India have risen to a level where a section of people is able to splurge obscene amount of money just for vanity purposes. I acknowledge that this has been happening ever since ancient times. But earlier the underprivileged did not have smart phones in their hand beaming such acts of self indulgence live to their anguish, elevating their sense of deprivation.
(b)   The people at bottom of the pyramid are inspired to give priority to aspirational spending (expensive smart phone, expensive vacations, extravagant marriages & birthday parties, etc.) over necessities like good education, healthy food, better living conditions etc. This is persistently increasing pressure on the government to provide for the education, health, housing, fuel, electricity, water etc.
It is common knowledge that a large portion of farmers' debt is non farming debt. This debt is mostly taken for unaffordable marriages, religious rituals on birth & death and medical treatment. This debt cannot be repaid from meager farm income that is barely sufficient for survival. This leads to frequent calls for debt waiver. The governments are obliged to honor these loan waiver calls due to their political compulsions. The vicious cycle is thus perpetuating. The primary consequence of this is perennial shortage of growth capital.
(c)    Media has become too potent to influence economic behavior of consumers. This is true for most of the democracies where media enjoys reasonable degree of freedom. But in our case since it threatens to damage the socio-economic structure of the country, a certain degree of control, may be higher standards of self regulation and stringent check on motivated campaigns, may be warranted. Alternatively, the State may consider running a counter campaign whenever a need is felt.
If the Finance Minister is searching for new avenues of raising tax avenue and wealth redistribution, this kind of vanity spending that impacts less than 2% of the population may be a good target. Let the GST on Justin Bieber concert ticket be 40% and the foreign exchange purchase for non-business and non-medical purposes may also be subject to 12% GST. Those who can spend Rs2,20,000 on Indo-Pak match, they can spend Rs2,50,000 as well.
 

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