Analysis of Indian news dated 06-Jul-2012
July 6, 2012
Indians pay more than 75% of their income as tax.
- Income tax of about 30%
- Excise tax, Service tax, Octroi, etc which cause prices of good and services to rise by more than 40%.
- Inflation tax because government keeps increasing the money supply at about 18% per year
Now, the government is laying additional tax on broadband internet usage. Internet connection should be treated as a necessity, especially since only a small percentage of Indians have broadband Internet connection. Indian government is more interested in robbing Indians, rather than long-term growth for the country.
Mauritius offers India 2 islands in return to avoid taxes for companies based in Mauritius. Mauritius is a tax-haven i.e. it has negligible taxes. So if a company shows its headquarters in Mauritius, it pays little tax. India loses out on this tax because companies say that they are paying tax in Mauritius and India has a tax-avoidance treaty with Mauritius. So Indian companies end up paying more tax than Mauritius based companies, even though both do the same business in India.
Mauritius is bribing India with 2 islands, so that it can continue to prosper at the cost of Indian companies. If India accepts Mauritius offer, then Indian companies will have a disadvantage. If India rejects Mauritius offer, then investments in India will reduce because other countries are willing to tolerate tax havens.
Ideally, there should be no income tax in India. There should only be consumption tax (aka excise tax). Then, all companies will be taxed equally, irrespective of their head quarter location. But, a corrupt government never reduces tax. It constantly increases taxes and penalties.
Top politicians are being charged in Aadarsh scam by CBI. To reduce the heat on Congress politicians, CBI Join director Rishi Raj has been transferred. In Indian bureaucracy, you are either corrupt or side-lined.
Indian Prime Minister cum Finance Minister, does not want Indians to buy gold. The question should be why do Indians buy gold? India has a high inflation. To protect their wealth, people are forced to buy gold/silver. Instead of requesting Indians NOT to buy gold, Indian government should either reduce inflation or give interest rate above real inflation. Then there will be no need for Indians to keep their wealth in precious metals.
Maharashtra state gave 344 acre plot in Powai to Hiranandani to build houses for poor without open auction. Hiranandani built houses for rich and upper-middle class. The loss to tax-payers is estimated to be Rs 30,000 crore. Hence, I say, no resources to be allocated by politicians without open auction.
Indian government gives tax incentives for home loan interest payment. It also forces banks to charge lower interest for home loans, as compared to other loans. All these steps make homes more costly in India than other countries. So, now many people cannot afford a decent home. Demand for 1BHK home (a very small house) is increasing in India.
Ideally, the government should remove all subsides and reduce taxes. This will reduce the prices of real-estate and people will have more money to buy these homes.
Montek Singh Ahuwalia says that some depreciation in Indian rupee is good. I say, good for whom? It is definitely bad for Indians. Maybe, it is good for Montek’s friends and Indian government (that can pay back its debt in cheaper currency).
China’s currency is appreciating w.r.t. Indian rupee. Yet, China’s exports to India are increasing; India’s exports to China are reducing.
An appreciating currency is good for the country; a weakening currency is bad for the country. Montek Singh Ahuwalia either ignorant or a liar. In either case, he does not deserve a place in Indian government.
China has lesser taxes, lesser government bureaucracy, flexible labor laws and fewer subsidies. This leads to a current account surplus, trade surplus, strengthening currency and more FDI. India has higher taxes, more government bureaucracy, strict labor laws and huge subsidies. This leads to current account deficit, trade deficit, weakening currency and lesser FDI.
Indian government is stealing 227 acres of land from tribals in Nagri, near Ranchi. Tribals do agriculture on this land and paid taxes till 2006. Then the government said the land was taken by government 80 years ago. Now, 80 years later, the government wants to build educational institutes, roads, etc on this land. So tribals are being forced out.
Iran is having difficulty in selling all the crude oil produced because of USA sanctions against it. So crude oil prices are rising. The whole world is paying a hefty price for these sanctions.
Danish Central bank now has negative rates. So if you keep money in a Danish bank, you have to pay bank a small charge. Goodbye, traditional banking. Now, banks will have to make money by gambling (err. trading risky derivatives).
Buy physical gold and silver to protect yourself. If you cannot touch it, you don’t own it. Exit all paper investments including ETFs, stocks, PF, PPF, NSC, etc.
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