Tax Free Regime - No Income tax, Sales Tax, VAT, etc etc.....

My wish


  • Total voters
    13
  • Poll closed .

ethan hunt

Well-Known Member
#1
Hi,

Guys starting this thread to discuss an exciting concept such as abolishing Direct & Indirect Taxes.

Kindly go thru the links wherein it is mentioned that BJP is delibrating on the same.

Also Mr.Rajnath Singh BJP President mentioned it on TV - ABP news on 12-10-2013 during Q&A session. He said that the party is thinking on the same lines & the policy might be included in vision document / election manifesto for 2014.

http://www.deccanchronicle.com/130919/news-current-affairs/article/bjp-looks-tax-free-regime

http://www.telegraphindia.com/1130922/jsp/nation/story_17377765.jsp

http://www.arthakranti.org/

What do you think guys, are you game ?

Let the ideas flow ...
 
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mastermind007

Well-Known Member
#2
There is a book someone gifted me that proposes to remove all taxes and replace it with a flat tax of 2%; No Slabs, No Deductions, No Rebates
 
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mastermind007

Well-Known Member
#5
the transaction charge will be charged to the buyer or seller or both?
This is not about trading only... It affects every aspect of income...

Another variant of idea that I have heard is that you get taxed on what you consume, not what you earn.
 

mastermind007

Well-Known Member
#6
it will be called transaction tax, 2% figure is an example only to drive the point home, it may differ, may be more / less than that
Yes!, that is the one I am talking about. Glad that you too know about it.
 

ethan hunt

Well-Known Member
#7
Tax spending instead of income.

Suppose, I earn Rs.100 pre tax & Rs.75 (for sake of simplicity after availing basic assumption etc) post tax.

If Income Taxes are abolished my new income is Rs.100 - deducting 2% transaction tax = 98, as I do not pay any income tax, that is a jump of Rs.23 from Rs.75 i.e. increase of 30.6%.

All other Indirect Taxes are also abolished, the prices of goods will fall by 20% (removing vat, sales tax, excise, octroi etc). For some items fall in prices will be more than 20% & for some it will be less than that. Suppose a TV set is available in market for Rs.9600 after abolishing all taxes it cost reduces to Rs.8000.
Considering transaction tax of 2% for each transaction, with 4 middlemen till the TV reaches from factory to the consumer = 8000*1.02*1.02*1.02*1.02= 8660
Reduction in cost = 10%
Profit margins remain the same, we have reduced the duties/taxes only.

So we see increase (30.6%) in income & decrease (10%) in prices is possible with tax free regime in above example.

Not to forget saving on service tax on telephone bills, eating out, hair cutting, gym etc.

Above all no harrasment form Revenue Officials.

Questions:

Will Govt be able to generate similar revenues as done in tax regime thru transaction tax alone in tax free regime ? Studies say it is possible, refer links in my first post.

Will menace of black money be eradicated ?

What other problems might crop up ?

What happens to Revenue Employees ?
For the tacit reasons known to all of us, Revenue Employees (Income Tax, Sales, Excise, Service Tax) will not leave their jobs even if you pay them entire future salary in advance & ask them to opt for VRS.

Many traders (allegedly) work on thin margins which might be less than even 2%, how will they adjust to such regime ?
Markets are smart & supreme and market dynamics will factor in every aspect.
(NB: Markets = all the markets, not only stocks / commo etc)
Ref: TV example above

Of course with my limited knowledge I am thinking on simple example.

What will be impact on inflation ?
Will rising income & decreasing prices cause inflation?
It is a possibility.

What if 2% transsaction tax is increased gradually till it takes away the advantage as calculated above in our income / products prices pre & post tax free regime?
Suppose it is 10% then what ?
 
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mastermind007

Well-Known Member
#8
Tax spending instead of income.

Suppose, I earn Rs.100 pre tax & Rs.75 (for sake of simplicity after availing basic assumption etc) post tax.

If Income Taxes are abolished my new income is Rs.100 as I do not pay any tax, that is a jump of Rs.25 from Rs.75 ie increase of 33%.

All other Indirect Taxes are also abolished, the prices of goods will fall by 20% (removing vat, sales tax, excise, octroi etc). For some items fall in prices will be more than 20% & for some it will be less than that. Suppose a TV set is available in market for Rs.9600 after abolishing all taxes it cost reduces to Rs.8000.
Considering transaction tax of 2% for each transaction, with 4 middlemen till the TV reaches from factory to the consumer = 8000*1.02*1.02*1.02*1.02= 8660
Reduction in cost = 10%
Profit margins remain the same, we have reduced the duties/taxes only.

So we see increase (33%) in income & decrease (10%) in prices is possible with tax free regime in above example.

Not to forget saving on service tax on telephone bills, eating out, hair cutting, gym etc.

Above all no harrasment form Revenue Officials.

Questions:

Will Govt be able to generate similar revenues as done in tax regime thru transaction tax alone in tax free regime ? Studies say it is possible, refer links in my first post.

Will menace of black money be eradicated ?

What other problems might crop up ?

What happens to Revenue Employees ?
For the tacit reasons known to all of us, Revenue Employees (Income Tax, Sales, Excise, Service Tax) will not leave their jobs even if you pay them entire future salary in advance & ask them to opt for VRS.

Many traders (allegedly) work on thin margins which might be less than even 2%, how will they adjust to such regime ?
Markets are smart & supreme and market dynamics will factor in every aspect.
(NB: Markets = all the markets, not only stocks / commo etc)
Ref: TV example above

Of course with my limited knowledge I am thinking on simple example.

What will be impact on inflation ?
Will rising income & decreasing prices cause inflation?
It is a possibility.

What if 2% transsaction tax is increased gradually till it takes away the advantage as calculated above in our income / products prices pre & post tax free regime?
Suppose it is 10% then what ?
Your gross income in short-term will drop as product that you are selling/manufacturing etc will get cheaper too. On a + side, your
cost of living will drop faster than income. Companies will also save money in operating expenditure segment and in-time will post healthier profit.
 

ethan hunt

Well-Known Member
#9
Your gross income in short-term will drop as product that you are selling/manufacturing etc will get cheaper too. On a + side, your
cost of living will drop faster than income. Companies will also save money in operating expenditure segment and in-time will post healthier profit.
We have kept profit margins unchanged, only taxes are deducted in TV example. So income should remain the same.
 

ethan hunt

Well-Known Member
#10
Talking about poll results of this thread as of now:
2 members have voted for Abolishing Indirect Taxes only, what can be the rationale behind thier thinking ?
I think, people which have income below taxable limit want that the goods should be cheaper (by abolishing indirect taxes) but people with income above taxable limit should pay Income Tax !
Any other reason ?
 
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