Monday, December 12, 2016

You can force taxes, but can you force love?

In 2013, the Congress government of the time passed the Corporate Social Responsibility Act, which made it mandatory for large companies to spend 2% of their profits on social service, to help the poor. Prof Aneel Karnani, of the University of Michigan, writes that the law has not been a success. After studying it he has concluded that, "....the CSR law is only apparently successful, and in reality is harmful." "There is some evidence that firms that were initially spending less than 2% increased their CSR spending, but those that were initially spending more than 2% reduced their CSR expenditure," writes Prof Karnani. Why? Because, "A required expenditure that does not lead to higher to higher profits is essentially a tax. This is a back-door way to increase corporate taxes without a transparent political debate. The corporate tax rate in India is 34.61% -- already one of the highest, compared to the global average of 24.09%, according to KPMG, and audit and consulting company." Indian politicians are adept at increasing taxes on us in the guise of social welfare for the poor, while they lead lives of extreme luxury on taxpayer money. Another such tax was the Right to Education Act which forced private fee paying schools to reserve 25% of seats for poor students. The result was that school fees soared as schools tried to recover their losses from students who paid fees. Did it result in a dramatic increase in standards? No, standards have actually fallen as Class 8 students are unable to read or do maths up to Class 5 standard. Last year was worse than the year before. Why? Because, majority of students, especially in rural areas, attend government schools and here there is no teaching. Traveling across India Mar Tully discovered that even in rural areas about 30% of parents are sending their children to private schools, though they could not afford the fees. In this way private schools draw away children of middle class parents and thus reduce pressure on government schools to perform. Why, when salaries of government school teachers have soared in recent years? Because teachers are forced to undertake many tasks other than teaching, such as "...conducting housing and economic surveys, census duty, election duty, voter identity card duty, opening bank accounts, Aadhar card registration, and managing mid-day meals," writes Omar Rashid. One solution would be to privatise education, wherein the government will give vouchers to poor people who will choose the school that their children will attend. Schools will compete for students, thereby keeping standards high. You can force taxes but you cannot force equality. Poorer children feel the difference in standards of living between themselves and the children of the rich. Punishing the middle class earns votes from the poor. Our politicians love the poor. The more the better.

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