TRANSACTION TAX REQUIRES LOT'S OF RETHINKING

Let me clear in the beginning that we are not one, who oppose any new idea. But before advocating anything specially one associated with economics, needs lot of innovative thinking. On paper any scheme appears to be good, but in practice it comes out different.Those advocating the schemes are talking, only superficially. Specially in our

country where every one takes Law by words, not by spirit. Transaction Tax requires lot of thinking, we feel. It is some what like PURCHASE TAX proposed by Dr Ram Manohar Lohia. The idea is well explained in the different books of Dr. Lohia. Once you go through it you will find that the idea is not just vague. If it is implemented every one have to share burden of tax as per his purchasing capacity. Rich one will pay more tax in comparison with the poor one who has very little for purchasing. But it has nothing to do with the price rise. For the purpose Dr. Lohia suggests another alternative ,DAM BANDHO' fix the rates. No one advocated for it, not even SAMAJVADIS. Therefore it remained only in books. Anyway we are not discussing it.

Presently government has only asked to link Aadhar card with the  bank accounts. And we are the people finding it hard and tiresome for the consumers. Presently our country is not ready for it. Bank's can not take burden of all accounts. As per Reserve Bank of India, out of 6,30000 villages only 4,00,000 villages are having connectivity with Bank's. As per World Bank Findex Survey, only 35 adults in India have Bank Accounts. How we are going to cover our entire population by Bank's. We should think of creating infrastructure first. Even developed countries with strong Bank infrastructure could not dare to try any such formula. We are aware about the literacy rate of our country. We have to teach people how to work with the banks. It is also a herculean task. 

Secondly it is not eradicating cash transactions completely. Notes below 100 rs. denomination will be in transactions. Looking to present market people will need to carry heavy amount of notes with them. It is going to create new problems. We have to take estimation of cash transactions before proceeding in this direction. And how we are going to cover these transactions under the umbrella of tax.

We are aware that in olden times we were having BARTER system. In which no cash transactions were required to be made. Only commodities exchanged. Later on PRONOTE and HUNDI system came in. In these systems one person writes on paper that he has to pay certain amount to the holder of that paper. One who have that paper in his possession can exchange it with anything having that much value. Those having good reputation need not to have that much holding of money in their possession. Only under the belief that the person writing the Hundi, Pronote is reputed one. That paper moves in the market doing number of transactions, no one doubts it. That is how paper currency came in existence. If such system developed again for avoiding TAX, then what.

Our opinion is different, it is not the tax which effects price of a commodity in the market but several other factors contributes a lot in deciding the price of a commodity in the market. Specially greed of earning multiples higher profit. We are observing in the market that selling price of a commodity is 100,200 or 1000 times higher to its production cost. Several time govt. gives relaxation in tax, with an intention of passing i to consumers. But consumers never get the benefit of this relaxation. We feel that price rise is a mentality, not effect of any tax. This is not going to effect that mentality.

One thing is important to mention, it is not the system that works but intentions of the society. If intentions are good anything will work, otherwise nothing. The system is not foolproof as supporters are claiming a long way to go, a lot to be discussed