If the police could run the economy it would be easy.

Our most esteemed Finance Minister, Arun Jaitley said that taxes have to be globally compatible. Pious thought. First, he should have talked to his Prime Minister, who was talking about increased tax rates on long term capital gains, at the same time. Markets fell by near 1%. By "globally compatible" we presume he meant low taxes with simple rules which everyone can understand. So far there is little sign of that. Foreign investors have no idea whether they are to pay 10% or 40% on capital gains on share transfers. These are people with enormous knowledge, so if they do not understand what chance have we? The government wants to combine all indirect taxes across all the states so that the whole of India becomes a common market with easy transport of goods and services to every citizen. Which means that the tax should have one rate and be simple so that every grocer and tailor understands what to do. But it seems that there is going to be at least 4 rates with added cess on certain products that are considered to be sinful by our holy politicians. Politicians do not trust each other, parties are suspicious of other parties and the states are in conflict with the central government, so consensus is difficult. Economic growth may fall steeply as the effects of demonetization works into the economy, which means indirect tax collections will drop due to lower consumption. States are demanding higher compensation from the center to fund social schemes to win elections. So, what "globally compatible" tax rates is Jaitley talking about? Is he talking about the 57.1% income tax rate, as in Sweden, or is he talking about 0% rate as in Dubai? But it is not just about rates. It is about what we get for the enormous taxes we pay. Politicians live in enormous luxury in palatial bungalows, with gun-toting security, free travel and healthcare while we get nothing. There are 579,092 VIPs in India. People see no reason to pay taxes while politicians are enraged at, what they see, as an attack on their entitlements. In their suspicion they have made the GST so complicated that every business will end up filling endless forms and tax officers are given targets to fulfill, so they resort to severe repression of taxpayers. Behind Jaitley's double-talk was a threat. He said that not paying taxes is "improper or immoral". If a big thug steals our money and we steal a little back, is it wrong? It maybe improper but it is certainly not immoral. The US is contemplating huge taxes on imports which could impact our exports. A fall in exports, a sell out of our stocks and bonds by foreign investors and the severe contraction in money  supply, due to demonetization, could see a big fall in the rupee. That will reduce growth even further, says the Bank of International Settlements. And that will reduce tax collections. Jaitley is a lawyer so he thinks of using law, the economy belongs to us.