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How to collect taxes

A national pastime in Russia used to be tax evasion. So the Govt. came up with a plan to collect taxes — a 13% flat tax system. Due to this

bq. “Russia Misuses Benefits From Its Flat-Tax System:”:http://www.newsmax.com/archives/articles/2002/4/15/170208.shtml As the Russian media reported, in addition to one low rate, Russia’s flat tax is much more favorable to savings and investments. In this country, income is taxed once when Americans earn it and a second time when Americans invest it. Russia’s flat tax does not double-tax corporate income or impose a capital gains tax on stocks, bonds and home sales. Also, with few exceptions, there is no double tax on bank deposit interest.

bq. As a result of this system, which established one of the lowest tax rates in Europe, Russia’s economy grew by more than 5 percent last year while most other nations were hit by recessions. In establishing a flat tax, Russia followed Hong Kong and Bermuda and such former Soviet republics as Latvia, Lithuania and Estonia, whose populations also enjoyed rapid growth in part because of their tax system.

I read the editorial in Wall Street Journal which advocates the same for United States. Is this something which can be done in India ?

3 Responses to How to collect taxes

  1. Niraj July 15, 2003 at 10:07 am #

    Ask Praful Bidwai! Seriously, this is a good idea, but will the Nehruvian mandarins in the vast Indian bureaucracy accept it? Not a chance, in my opinion.

  2. ind July 15, 2003 at 11:26 am #

    It sounds good, but our people mentalities are completely different. Even with lots of money , we are hesitant to invest money in the market and finding ways to avoid paying tax, the age old practice in India, is difficult to root out even after implementing this reasonable flat rate.

  3. Yazad July 17, 2003 at 1:11 am #

    At the outset, let me state that I think all tax is theft. (note, I said “tax”, not user fees)

    Now, if we have to pay this extortion called tax, I would prefer to pay a flat rate rather that a “progressive” tax which simply means that I have to pay more to get an accountant to find out how much tax I have to pay!

    Journal articles on flat tax abound. A small surf led me to “A Feasible Approach to Flat Tax Reform”, by Kamhhampati S. Sastry and Jeffrey B. Nugent.

    Here’s an email which talks about Mr. Sastry’s paper. Unfortunately, IndiaPolicy.org is now in some dispute, and their freewheeling, sometimes raucous debate is thanda!

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