2017-07-09

Net Positive

Nothing comes with all merits. Demerits are embedded in every decision. Decisions, therefore,have to be evaluated in terms of their net positive impact. 

Because of inefficiency in our tax regime - both loose & befuddling regulations and sloppy execution - many have built businesses on tax arbitrage - their profits are an outcome of their not paying taxes.  At best, they pay minuscule taxes. This is structural to their business.

Silver lining here however is these businesses have created jobs. Millions of them which sustain our socio-economic engine. 

In a country with 1.4 billion people, I would see this as a net positive situation. Governments have never been honest with tax payers money. They have squandered tax payers money in the most inefficient and unethical manner. While these firms referred to above have not paid taxes they have created jobs. Jobs mean spending. Consumption is the largest delta for GDP. As people spend they pay (indirect) taxes as well. 

GST is good. But - methinks - not necessarily for India where employment has been generated on tax arbitrage. And when GST takes away business out from unorganised sector to organised sector which pays taxes and is lot more productive - hence doesn't create as many jobs - we are staring at job losses. This government so far hasn't done anything about job creation. If any, has driven social policies and fueled sentiments which have taken away jobs. 

Now is this new tax regime which may end up putting job creation at extreme risk. 

Nothing is right or wrong. We have to evaluate something in the context of our circumstances. I wish GST regime created a net positive in terms of fillip to GDP and to jobs. My view is unlikely it will measure up.

PS: networking unfortunately has been encouraging 'group think'. it takes a conscious effort to not to fall into the trap of what i think is correct because i am reading those who think as i think because i subscribe to only those who think as i think because twitter, et al encourage me to subscribe to those who are already in my network because we have been friends because we think alike. Thanks for bearing with me on this.



2017-07-09

Net Positive

Nothing comes with all merits. Demerits are embedded in every decision. Decisions, therefore,have to be evaluated in terms of their net positive impact. 

Because of inefficiency in our tax regime - both loose & befuddling regulations and sloppy execution - many have built businesses on tax arbitrage - their profits are an outcome of their not paying taxes.  At best, they pay minuscule taxes. This is structural to their business.

Silver lining here however is these businesses have created jobs. Millions of them which sustain our socio-economic engine. 

In a country with 1.4 billion people, I would see this as a net positive situation. Governments have never been honest with tax payers money. They have squandered tax payers money in the most inefficient and unethical manner. While these firms referred to above have not paid taxes they have created jobs. Jobs mean spending. Consumption is the largest delta for GDP. As people spend they pay (indirect) taxes as well. 

GST is good. But - methinks - not necessarily for India where employment has been generated on tax arbitrage. And when GST takes away business out from unorganised sector to organised sector which pays taxes and is lot more productive - hence doesn't create as many jobs - we are staring at job losses. This government so far hasn't done anything about job creation. If any, has driven social policies and fueled sentiments which have taken away jobs. 

Now is this new tax regime which may end up putting job creation at extreme risk. 

Nothing is right or wrong. We have to evaluate something in the context of our circumstances. I wish GST regime created a net positive in terms of fillip to GDP and to jobs. My view is unlikely it will measure up.

PS: networking unfortunately has been encouraging 'group think'. it takes a conscious effort to not to fall into the trap of what i think is correct because i am reading those who think as i think because i subscribe to only those who think as i think because twitter, et al encourage me to subscribe to those who are already in my network because we have been friends because we think alike. Thanks for bearing with me on this.