India 's Effect On The Indian Economy

The budget will also be adversely affected. The net loss in the budget would be about 2.5% of the country’s GDP representation $4.5 trillion. There are the figures that could have developed with the implementation of the tax policy in the country. The adverse effects of the tax policy has forced the federal government of the United States of America to shift to the alternative minimum taxation as it is stipulated in the Tax Relief Reconciliation Act of 2001 law. This was more lenient as it had much negative effects on the operation of the country. Even though the revenues and the budgets are affected, the effect of the alternative taxation was no such much adverse. The alternative taxation served the real need in the society.

Taxes are a necessary component for operating a government, however, they are also the source of great debate within our society. Especially when considering what types of taxes to use, and how much to tax the population without negatively impacting the economy. Income taxes are currently one of the biggest sources of income for the government, but are also one of the biggest concerns given the level of complication involved with the current tax system. Although many argue that the current progressive tax system contributes to our country’s economic growth, research indicates there may be benefits for simplifying the income tax system without stalling growth. One theory indicates implementing a flat tax system would not only provide consistency for businesses and consumers, it would positively impact economic growth. If given the appropriate considerations, including an equitable rate, a flat tax would increase consumer confidence and lead to an increase in consumption, and ultimately growing real gross domestic product (GDP).

Indirect Taxes relates to VAT and Excise duties. VAT is sales tax which is collected by the business (Tesco) and given to the government. Essentially if increased it would increase the price of Tesco’s products, this subsequently will more often than not lose consumer interest.

Government requires fund to take care of its citizens and provide development measures within its jurisdiction. So one of the sources is levy of taxes in direct and indirect form. Irrespective of Tom, Dick and Harry , one cannot avoid the taxes. Before getting into know about how you directly pay taxes, lets look how indirect tax goes from your pocket.

The tax is the government's money to be collected from the people. In order to develop the country. Have you ever think if people do not pay tax what is going to happen. I’m Mr.sujit

An Economic Reforms Priority research report issued by the Grattan Institute dissects the possible benefits of tinkering with GST. It calculates that the GST-exempt goods and services equate to about 40 per cent of consumer spending, which means the government gives up about $30 billion a year in revenue. The institute recommends the GST be applied to all of these exempt goods, thus the additional revenue could fund substantial income and corporate tax cuts that would increase economic growth. This would raise an extra $31 billion a year in revenue and add $20 billion a year to the economy or an extra $870 a year income for everyone. The tax system would be far simpler for the Australian people.

Indirect taxes are charged by government on producers or suppliers. The main aim of these taxes is to reduce pollution and improve the environment. The examples of indirect taxes are value added tax (VAT), excise duty, air passenger duty, insurance taxes such as car, home or pet insurance, TV licence or driving licence.

In recent times, the decline in the income tax revenue base have led to a shift in the importance of indirect consumption taxes, such as the GST. This will allow for more flexibility to finance the cost of the ageing population while at the same time funding compensation for households who are affected by the increases posed by the reformation of the tax system.

The Howard Liberal Government introduced the Goods and Services Tax (GST) in 2000, as part of the A New Tax System (ANTS). It currently exists as 10% consumption tax on most goods and services sold or consumed in Australia with notable exceptions on fresh foods, education and health. In a radio interview, former PM John Howard explained his preference for minimal exemption and the necessity to pass the bill through senate required the government to negotiate with the Australian Democrats (Reynold 2000). In its current form, the GST has bipartisan support due to its relative success. Recently the need for more revenue for States to

GST will reduce tax burden on producers and foster growth through more production. This double taxation prevents manufactures from producing to their optimum capacity and retards growth. GST would take care of this problem by providing tax credit to the manufacturer.

India has created tax-free zones, ex. Silvassa. Ador concentrated production in India and reached cost advantages through economies of scale P.9 PAR.4

Business Taxes also known as corporate tax is imposed by the government on the businesses, which becomes government's income that it uses in development and welfare work (Cope, pg. 19). Corporate tax is an expense for the business but if it is too high the business will be reluctant to pay these taxes this might even increase the chances of tax invasion. Business might also try to shift the taxes incidence on the buyers in the term of high prices, which might give rise to inflation, on the employees in terms of low wages that might make standard of living low, and on the shareholders in terms of low profit causing them to withdraw their investments. Although this all seems not so serious but apart from these private cost on the employees, customers and shareholders it also increases the social cost. When businesses especially ones, which sell goods whose prices elasticity of demand is elastics, cannot increase prices they look for ways to cut down on the quality or the quantity of the product in order to reduce their cost of production and to increase their profits. This decreases incentive to produce and therefore the GDP is affected. In order to cut down on the cost of production they use resources of poor quality, which harms the environment in term of air pollution. Furthermore which burden of high taxes on them they might ignore the necessary laws of disposing of the waste from the factories in a proper way. The dreadful effect of raise In the prices of

The presence of competition in the indirect tax within the export and import zones leads to the creation of horizontal tax externalities. Vertical tax externalities may also arise between the central and regional government. In most of the cases, both countries tend to maximize revenue through tax collection through purchasing and selling of goods. One party may therefore set policies that aim at in increasing tax collection (Lucas 369; & Ballard and Lee 720). Besides, an understanding cultivates from their works that the government may also balance the availability of

1) Tax is the amount of money demanded by government to financially support the economy. The main two types of tax are direct tax and indirect tax. Direct taxes are levied on the income, property, or wealth of an individual (e.g. Income Tax & Corporate Tax). Direct taxes tend to be progressive, efficient, and flexible. However some will also argue that it encourages tax evasion, disincentive to work, tax havens which results to leakages, and is unpopular with the electorate. On the contrary, indirect taxes are charged upon goods and services, thus affecting citizens indirectly (e.g. VAT & Council Tax). It is effective because it let the people decide whether or not to pay it. However, taxes like VAT are regressive towards citizens.

A main issue in tax design in different economies over current decades has been whether countries should be encouraged to move away from trade-based taxes, such as tariffs towards more broadly-based consumption taxes, such as VAT and excise. It has generally been the stance taken by World Bank country missions advises on tax policy [15].