On the Simplest Smallest Most Universal Direct #FlatTax of 500 Rupees per annum for India — accruing to the States, with a BPL exemption too

My idea of a Rupees 500 per annum direct #FlatTax in India is the simplest & most effective possible. Start with these population data of our 18 larger States…

Exclude 40% children (under 18)=> 687 million adults; these 687 million each pays to his/her respective State Govt a nominal direct #FlatTax of Rs Five hundred in the year raising 343.5 billion=0.3435 trillion=0.3435 lakhcrores… no it’s not much, merely starting a process…

500 Rupees is, let’s say, a day’s wages for unskilled labour… so I am saying every adult pays that amount every year to the Public Exchequer of his/her State Govt as a direct tax … I do not call it an “income tax” because it is not an income tax; nor is it a poll tax because it has absolutely nothing to do with voting; it is merely a #FlatTax similar if anything to a fixed or recommended donation to a common cause, like eg a Puja “chanda”…

For the 18 larger States, revenue from this #FlatTax earns about 343.5 billion=0.3435 lakhcrores; the remaining 10 smaller States (including Delhi) plus UT’s raise a further 51.8 billion for themselves similarly; these are *small* amounts in 🇮🇳 but even so… and besides there’s more too…

500 <=> excessive as a #FlatTax for those #BelowPovertyLine #BPL even many of those above it… #PovertyLine of Rs 50 daily expenditure per head => 10 days expenditure can be excessive as an annual #FlatTax; the citizen declares name, Aadhar/PAN, approx income, is exempted…

Equally a 500 p.a. #FlatTax is a nominal sum for large numbers of people in 🇮🇳 … a State Government may say it will give a Certificate of Appreciation or some other honour to citizens who volunteer to pay the #FlatTax of 10 or 20 or 50 or 100 or 200 or 400 of those #BPL exempted …

It may also give some recognition to #BPL citizens who do not take such an exemption but pay the annual Rs 500 #FlatTax.

“those who bear the costs of public services are also the beneficiaries in democratic structures” said Jim Buchanan following Wicksell which I quoted in my 2000 April @RBI lecture=> a direct simple small universal #FlatTax of Rs 500 pa, accruing to the State...

also there’s Marshall’s insight which governs all theory of modern taxation: “the same sum of money measures a greater pleasure for the poor than for the rich, a tax of £20 on each of 50 incomes of £200 caused “unquestionably far greater hurt” cet par than a tax of £1000 on one £10,000″… Finally, when I say all this is “merely starting a process“, what I mean is what I said in 2007: “the Indian people are at present both over-taxed and under-taxed: we are over-taxed by the corroded, corrupt wasteful polity that has actually arisen, while we are under-taxed relative to the fiscal and monetary needs of a robust modern democratic polity yet to exist”.

Originally tweeted by Dr Subroto Roy (@subyroy) on December 1, 2021.