Negetive Income tax

["Praveen Hombaiah" <ph_one@hotmail.com>]

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I strongly disagree with any attempts to introduce Negetive Income taxes in
India, for some of the following reasons.

(1)  The idea proposed here is the elimination of all Indirect subsidies and
introduction of Direct Subsidy through Negetive Income Tax.
     I really don't believe the elimination of all Indirect Subsidies would
be achievable(not any time soon, atleast).  The only thing that will come
out of such an attempt would be to add this new dirct subsidy to all the
existing subsidies.  Even if by some miracle we are able to eliminate
Indirect subsidies, we should keep vigil to keep it so, and not add a new
form of subsidy.

(2)  This scheme will leak./will lead to large scale corruption
     No matter what methodology is used to identify the poor, I have no
doubt this will lead to large scale corruption and the scheme will leak.
Especially in a system where corruption is already institutionalised.

(3)  Not the business of the Govt.
     It is not the business of the Government to eliminate poverty by
directly giving money to the poor.  The business of the Govt.  is to provide
a level playing field, good governance and good economic policies.  This
will fail just like the attempt by the Govt.  to provide employment by
directly running huge factories and public sector enterprises.

(4)  Will bloat the beaurocracy/Bigger Govt.
     Despite all attempts to use existing manpower, such a huge scheme, will
definately bloat the beaurocracy.

(5)  Crowding out Factor.
     Such a huge scheme will definately lead to reduction in the money
available to private enterprises.  Private enterprises, which time and again
have proved better at poverty reduction, than any govt. scheme.


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