Excessive Taxation is Bad

This post is in response to an interview of Sunil Mittal (Chairman of Bharti Airtel) on Rediff.com where he said that excessive taxation was killing the fixed-line phone sector which is so important for the propagation of broadband in the country.

Excessive taxes can never reap the desired results – it’s the same as killing the goose that lays the golden eggs ; it will always be counterproductive. Why can’t we have rational taxation everywhere, across the board – import duties, taxes on fossil fuels, goods and services taxes and so on?

Perhaps the only case where heavy taxes are justified are in the case of dumping of cheap goods into our local market, as is happening from, say, China. Other than that, high taxes only serve to drive transactions (and therefore revenue for the Govt. via taxes) underground.

For instance, a Sony Cybershot 7.2 MP digital camera costs Rs. 12,000 in India in an authorised Sony outlet, compared to Rs. 8500 in the grey market here in Bangalore and about Rs. 8000 in Singapore, the US, etc. So why shouldn’t I buy it from the grey market or from abroad? Am I a fool to pay extra? Ditto for LCD TVs and other electronic goods.

The Govt. needs to seriously rethink its archaic and anti-consumer tax policies. May better sense prevail upon the powers that be.


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