Sunday, August 09, 2015

The merry go round of tax and corruption.

Delhi has been ranked at 379 among 476 municipal areas studied, in India. As the capital city Delhi hosts the central government. It also has a state government and 3 municipalities. The more the politicians the more the multiplication of corruption. The quickest way to clean Delhi is to get rid of the municipalities and let the state government be in charge of all services for which we pay such huge taxes. Some services, such as garbage collection, maintenance of traffic and street lights and repairing roads can be privatised. Contracts should be awarded by competitive bidding and fines for shoddy work will be written into contracts. Instead monopolies, such as power distribution and car parking have been handed over to private contractors, resulting in a huge rise in electricity bills and cars are double or triple parked, causing traffic jams. In the assembly elections in January the Aam Aadmi Party won 67 out of 70 seats. Local BJP workers must have worked against the party to stop the anti-corruption drive by the Prime Minister, just as they sabotaged Gen Khanduri in Uttarakhand. Apparently 400 buildings have been found unsafe in north Delhi, which is a joke because people have made structural changes in almost every house or apartment without permission and without safety advice from an engineer. Recently the High Court has allowed regulators to enforce hotels and restaurants to sell bottled water at the printed price. Higher charges were allowed by the Supreme Court but a new law in 2011 gives more power to the government. In India the Maximum Retail Price, or MRP, must be printed on every item sold to the public. No doubt, the intention of the law was to prevent overcharging by shopkeepers but, like every law in India, it just shifted the corruption elsewhere. The MRP printed on bottles of water, sold in restaurants, is more than double the MRP of identical bottles sold in corner shops. So, manufacturers and hoteliers are cooperating in ripping off customers. MRP misuse is even more rampant in hospitals where the MRP on medical devices is often double of what the hospital pays to buy it from the manufacturer. A fixed MRP helps the government to collect taxes on every product and this is the source of all corruption. Why is it fine to sell a bottle of beer at 3 times the price but not water? After all the cooling and service is the same. Because huge taxes on beer means that the government is a beneficiary in cheating the customer. Only 3% of people in India pay income tax while about half of all Americans pay income tax. Imagine if 600 million Indians, almost double the entire US population, paid income tax. The government would be inundated and all work would come to a standstill. So, we maybe helping the government by not paying taxes. Makes up for the cheating.

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