Wednesday, June 29, 2005

An enreupreuner's viewpoint about tax-evasion & Tax/GDP ratio

To : Prod. Cp.P.Chandrasekar, JNU, New Delhi

Dear Sir,

I am an entreupreuner running a SSI unit (molding)
at Chennai.

We are taxed at 35 % income tax ; and sales, excise
and power tax (as indirect -cross subsidy to domestic
consumers) constitute a good chuck of our turn-over.
Our power bill comes at a whopping 35 % of our monthly

I undertand that you are advocating rising the tax-GDP
ratio even higher. GDP is the total turnover of all
industries, enterprises, indiviuals, etc. It is the
total annaul sales turnover. Not the gross profit,
as many are misled to belive.

Now, we make some 15 % profit on our annual turnover .

So, we cheat on income tax with the help of accountants and auditors.
We inflate the expenses, sell without invoices, try to
con the tax adminisntrators. We bribe them to avoid
penalisation. We feel that the present tax rates and
regime are grossly unfair and very high (incl of power
subsisdy that we foot).

The govt comes in as a 1/3 partner without putting any
capital at the end ofthe year (while never sharing our
losses or problems).

We work hard and take great pains in running the unit
profitably. It is my hard earned money and i have the
fundamental right to spend it as i deem fit. i try to
treat my workers with compassion and sensitivity.
But charity and service will be at my terms, not at
any one else's.

I propose that JNU professors and economists/authors
may be taxed at a 'progressive' rate of some
73 % of gross income. Rs.10,000 p.m may be enough for
you to live comfortably. Or i suggest that you resign
your safe govt job and enter self employement like
publishing, etc, so that you may understand our
feelings and problems.

Over taxation in the 50s and 60s at some 90 % max plus
licence raj with 20 % inflation had wrecked our
economy and morals. A whole generation of would-be
entreupreuners were made into govt-job seeking
weaklings and enterprising nature was punished as
'profit-mongers' ; Any working man (like you or me)
works for making money (be it salary or wages or
profit) ; then why is it that only capitalists alone
are blamed as 'selfish'.

We have a more objective insight into human nature
than any Marxists. Man will work hard and give his best
only when there is an incentive to gain (profit, etc).
Otherwise, in a regulated and controlled set-up, like
in govt jobs, ineffeicney and sloth plus corruption
floursihes. How is it that many pvt enterprise better
and cheaper services than govt (like in transport or

Thanks & Regards

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Ramakrishnan said...

Hi, I am Ramakrishnan. We met at Lakshmi Narasimhan's home, remember? And you gave me your blogspot address to me there.

I read your entire first page on your blog, and would not hesitate to say you are the best clear-thinking individual I have come across.

I only wish our policy-makers were half as erudite as you are. Keep blogging. Is there anything we can do to make these things they way you have suggested? Do let me know.


Bharat Sharma said...


I do not know how I reached your site.

I must compliment you on the clarity of thought and forthrightness.

Your thoughts are also mentioned in a letter a business owner wrote to Barak Obama. The letter is there on my blog.

Incidentally, I run a SME business called Vin Industries at, related to plastic and rubber additives.

Bharat Sharma

Bharat Sharma said...

And please do keep blogging.

I was also impressed with your views on removing the creamy layer.