Repeatedly I ask those who are opposed to wider tax net & enhanced collection, how will the state continue to function when currently its running a fiscal deficit of 6-7%, and this even before the circular debt is added. With debt to GDP ratio already over 84% there's virtually
no further capacity to borrow more. It should also be understood that sovereign borrowing is a tax on future generations. The overall cost of federal bureaucracy including both direct salaries, pensions, and perquisite is much less than 1% of GDP despite all the fuss made about
about secretaries and other federal bureaucrats getting subsidised housing and cars. Removing these maybe emotionally satisfying for rabble rousers but will make very little material difference to fiscal deficits. The obsession with land banks is misplaced since it ignores the
simple fact that bringing huge tracts of land onto the market will ensure that land prices collapse, which will have its own ramifications on the economy as whole. Collapsing property prices is one of the sure ways of ensuring recession. Hong Kong where economy has revolved
effective management of land banks has been careful in terms of how much land for use is brought into the market.
One of the worst aspects of GoP revenue generation has been that it's been targeted to essentially to those groups or segments of the economy that are per force
One of the worst aspects of GoP revenue generation has been that it's been targeted to essentially to those groups or segments of the economy that are per force
documented and transparent. Within this an even more self-defeating aspect has been the over-reliance on import tariffs, which has often been given the mask of protection of local 'infact' industries. Few aspects of fiscal policy has harmed the overall competitiveness of industry
than protective tariffs that have been granted indefinitely. This has ensured that the economy has almost entirely been removed from the global value chains in most sectors.
The motivation for this flawed fiscal approach has been driven by the fact that policy makers neither
The motivation for this flawed fiscal approach has been driven by the fact that policy makers neither
the will nor have the political acumen to institute a broadening of the tax net such the burden doesn't simply fall on those that are often not only the most transparent but also the most productive.
It should be understood that the broadening of the tax net would also imply
It should be understood that the broadening of the tax net would also imply
lower rates of taxation/tariffs for the overall system. The maths are quite obvious and simple that as the numbers of participants in the tax net increases, both in terms of nos of individuals and sectors, less burden will need to be placed on any particular segment of economy
The positive news that the economy, fiscal policy, debt levels, taxation, and other such substantive issues are headlines issues and many of our TV anchors making a complete hash of. In due course from the cacophony of confusion that is regularly spouted by ill-informed talking
heads will emerge others who will add sanity and factual analyses to provide clarity for future pathway for fiscal and trade tariff policies. As better understanding of ground realities on the back fact based analyses emerges, the miasma of despair and despondency shall lift
