Étatiste Crackpottery

Shortly after we posted Jayant Bhandari’s recent article that inter alia discussed  the new complex GST (general sales tax) regime introduced in India by the Modi government (see “The Lunatics Have Taken Over the Asylum” for details), we were contacted by Lakshminarayanan Kumaraapuram, a small businessman in Mumbai. He asked us whether we would be prepared to publish a comment he originally mailed to the prime minister’s “grievance portal”, so as to transform it into an open letter.

 

Let’s keep it simple… but not too simple. The chief surgeon gets ready to wield his scalpels and cleavers.

 

His comment underscores that small businessmen are indeed deeply unhappy about the new rules, and for good reason. As Jayant already mentioned, the effort one has to expend to comply with the new rules – which not even the bureaucrats who are tasked with enforcing them fully understand – is absolutely staggering (this includes having to file nearly 40 tax returns per year and being forced to ensure one’s suppliers’ compliance as well, with everyone being compelled to take on the role of unpaid tax collector).

We would note to this that the actions undertaken by the Modi government in recent months – beginning with the overnight demonetization of cash, to the introduction of a mandatory ID card, to the GST shenanigans – all remind us fatally of the interventionist measures many governments have eagerly implemented in nominally capitalist Western countries in recent years. The main difference is that India is even less suited to handle such impositions.

Whether or not this is intended, said measures all favor big, entrenched businesses to the detriment of individual entrepreneurs by essentially taxing and/or regulating small businesses out of existence. Financial privacy and economic freedom seem to be under attack from every conceivable angle almost everywhere. These ill-conceived stratagems, which appear to be based on the notion that citizens need to be placed under general suspicion and, to paraphrase Robert Nozick, that consenting adults have to be kept from engaging in voluntary capitalistic acts as much as possible, are supposedly inter alia aimed at boosting the tax revenues of assorted de facto bankrupt welfare states.

These brilliant ideas are cooked up by the same masterminds who believe we can actually get richer by debasing money, who are giving birth to Soviet-style “4 year plans”, are doing their best to roll back civilization in the name of “saving the planet” (demonstrating that their hubris knows no bounds) and  – considering various G20 communiques released in recent years – seem to have convinced themselves of the absurd fantasy that “economic growth” is something that is conjured into existence by government decree.

It is an apodictic certainty that whatever this bunch of economic illiterates comes up with (endorsed by their mediocre courtier economists though it may be) will not only fail to bring about the intended effects, but will end up doing the exact opposite. Experience suggest that once that happens, more, and in all likelihood worse, indignities will be inflicted on the tax serfs to “fix” the problem. Mr. Modi meanwhile seems intent on cementing his credentials as a trailblazer in étatiste crackpottery these days. IMF, World Bank and the largely execrable Western mainstream media seem duly impressed, while many of India’s poor are grinning and bearing it, presumably because they are used to being abused.

 

Indian bureaucrats groping the newest elephant in the darkroom.

Illustration via business-standard.com

 

Woe Is Us

Small businessmen in India seem less likely to succumb to passivity than the poor from what we could see so far, but they have so far been powerless to stop events from unfolding.

As Lakshminarayanan writes, right now he would be all for everybody going Galt:

 

“This is so silly an idea [the fact that about 40 tax returns are required every year for each province a company operates in] that even I am surprised it is part of GST. I have written to the PM’s Grievance Portal about this, but after a few days the status was “Thanks for your valuable feedback. Case closed.” […]

It is time for small businessmen to come together. Can small businessmen go on indefinite strike together? Close shop, whatever the losses. Let us see where the government goes for taxes.”

 

And here we go, with a poignant tale of woe…

 

Without further ado, here is what he sent to Mr. Modi’s “grievance portal” so that the intended recipient could proceed to ignore it with the alacrity of a power-drunk politician:

 

Woes of an Honest Tax-Paying Businessman due to GST

I am one of the probably millions of small businessmen who have been paying tax regularly over the last decade. I would like to highlight my woes and those of probably millions of other small businessmen due to the implementation of GST. While the hype generated by sloganeering that the corrupt will be caught may attract votes and win you elections, if your real purpose is to Make India Great Again [MIGA! ed.], then it is better done by implementing policies that make the lives of small businessmen simple and easy, so that they can focus on generating business and thereby provide employment instead of spending their money on filing returns.

From what I hear and understand, the only business that will flourish due to the  implementation of GST will be chartered accountants and the people who will gain employment due to GST will again only be chartered accountants. Even they will likely be hard pressed to get the people needed to man the job of filing returns. To get a measure of the problem please try and understand the plight of a businessman on the ground. Earlier, as a service tax payer, we would pay service tax every quarter and file returns twice a year. Also, we needed to file only one return every time. Now we are told that with the introduction of GST we will have to file returns every month, consisting of one return each for CGST, SGST and IGST  – which means we have to file 36 returns. Do you think it is right to burden small businessmen with such an onerous task?

Can you imagine how heavily this is going to weigh on small businesses? Also, can you truthfully say that it is a progressive step to make businessmen spend more time, effort and money on filing returns when the same time, effort and money could be used to increase business and create employment? I would also like you to look at the aspect of implementation. Can you imagine how difficult it is going to be to keep track of whether millions of businesses have filed their returns and taken action month after month (despite the power of computers)? To put this in perspective, suppose that ten percent of  all companies are not able to do this month after month, which means lakhs of businesses every month, which will inevitably become millions and crores in a few years.*

Don’t you think that this task will soon become too daunting? Now to go after that many companies, you are going to need a horde of enforcement officers. Thus, in the long run, the mandatory filing of returns every month will ensure that there will eventually be more enforcement officers and chartered accountants than businesses. It is highly regrettable that a Government that prides itself on focusing on creating jobs and improving the ease of doing business can take a step that is by its very nature regressive, as it wastes resources and does not add to the economy.

Therefore it is my earnest request that you look into this and ensure that life is made as easy as possible for the small businessman (who, by the way, is beset with umpteen problems without the need for government to foist even more on him) and ensure that he is able to focus on his business and contribute to the economy.

Regards, Lakshminarayanan

 

* Note: 1 lakh = 100,000, 1 crore = 10,000,000

 

Be Careful What You Wish For

Our correspondent from Mumbai is hopeful that at least the faces of those in charge will eventually change again. As he tells us:

 

The present Modi government is on a high because it keeps winning elections. Since poor people outnumber educated and rich people in the country, rhetorics and theatrics (Modi is a great orator) are doing the job of garnering votes right now and he appears invincible. But then, it was like this when Indira Gandhi was powerful too. Since each dog has its day, I am sure the day will come when the opposition will emerge stronger again.”

 

Now, we can understand that many businessmen are unhappy with Mr. Modi and his his recent policy initiatives, and admittedly, we are thoroughly ignorant of the policies espoused by the modern-day version of the Congress Party. But this may be a case of “be careful what you wish for”. Indira Ghandi was a prime example of the  slightly unhealthy predilection for “strong leaders” Indian voters appear to harbor.

She inter alia presided over a state of emergency, during which civil liberties were suspended, she ruled by decree and opposition politicians were jailed… she  waged war both within India and against neighboring countries, she was convicted of electoral fraud by the Supreme Court (a verdict she simply ignored), and she nationalized the banking, oil, coal, steel, copper, refining, textile and insurance industries, while putting what remained of the private sector into a corset of stringent regulations. She was also known for fostering nepotism and implemented socialistic “5 year plans”, which mirabile dictu, were exceeded every time!

The Indian Libertarian wrote about Indira Ghandi in 1969, six years before the state of emergency was declared:

 

“It would be difficult to find a more machiavellian leftist than Mrs. Indira Gandhi… for here is Machiavelli at his best, in the person of a suave, charming and astute politician.”

 

As Jayant Bhandari has already occasionally warned in his usually less than cheerful missives, whoever comes after Modi may easily turn out to be even worse. Then again, failed economic policies sooner or later always provoke corrective action, often because there is no other choice.

 

Sometimes one jumps out of the fire only to land in the frying pan…

Cartoon by Gary Larson

 

 
 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke

   
 

One Response to “India’s GST: A Small Businessman Speaks Out”

  • Kafka:

    Ah, yes, the GST, a “value-added” tax. Touted as more fair, easier to administer, etc. But it doesn’t replace any other tax, so it is just another tax upon all the other taxes government foists upon small business to collect.

    My observation is the parasites outnumber producers. And the parasites are growing in number as producers shrink.

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Canada: Risks of a Parliamentary Democracy
      A Vulnerable System Parliamentary democracy is vulnerable to the extremely dangerous possibility that someone with very little voter support can rise to the top layer of government. All one apparently has to do is to be enough of a populist to get elected by ghetto dwellers.   Economist and philosopher Hans-Hermann Hoppe dissects democracy in his book Democracy, the God that Failed, which shines a light on the system's grave deficiencies with respect to guarding liberty. As...
  • Federal Reserve President Kashkari’s Masterful Distractions
      The True Believer How is it that seemingly intelligent people, of apparent sound mind and rational thought, can stray so far off the beam?  How come there are certain professions that reward their practitioners for their failures? The central banking and monetary policy vocation rings the bell on both accounts.  Today we offer a brief case study in this regard.   Minneapolis Fed president Neel Kashkari attacking a block of wood with great zeal. [PT] Photo credit: Linda Davidson...
  • Thoughtful Disagreement with Ted Butler
      Too Big to Fail?   Dear Mr. Butler, in your article of 2 October, entitled Thoughtful Disagreement, you say:   “Someone will come up with the thoughtful disagreement that makes the body of my premise invalid or the price of silver will validate the premise by exploding.”   Ted Butler – we first became aware of Mr. Butler in 1998, and as far as we know, he has been making the bullish case for silver ever since. Back in the late 90s this was actually a...
  • On the Marc Faber Controversy
      Il n'y a rien à défendre - by Vidocq   Dr. Marc Faber, author of the Gloom, Boom and Doom Report Photo credit: Michael Wildi / RDB     Il n'y a rien à défendre - There is nothing to defend Personne n'a lu ce qui a été écrit. - Nobody read what was written. Personne n'a pensé avant d'agir, comme la plupart des gens de nos jours. - No one thought before acting, like most people nowadays. L'homme que tu pends est l'homme que tu as fait, pas l'homme que...
  • Donald Trump: Warmonger-in-Chief
      Cryptic Pronouncements If a world conflagration, God forbid, should break out during the Trump Administration, its genesis will not be too hard to discover: the thin-skinned, immature, shallow, doofus who currently resides in the Oval Office!   The commander-in-chief - a potential source of radiation?   This past week, the Donald has continued his bellicose talk with both veiled and explicit threats against purported American adversaries throughout the world.  In...
  • The Donald Can’t Stop It
      Divine Powers The Dow’s march onward and upward toward 30,000 continues without a pause.  New all-time highs are notched practically every day.  Despite Thursday’s 31-point pullback, the Dow is up over 15.5 percent year-to-date.  What a remarkable time to be alive.   The DJIA keeps surging... but it is running on fumes (US money supply growth is disappearing rapidly). The president loves this and has decided to “own” the market by gushing about its record run. During...
  • Precious Metals Supply and Demand Report
      Fat-Boy Waves The prices of the metals dropped $17 and $0.35, and the gold-silver ratio rose to 77.  A look at the chart of either metal shows that a downtrend in prices (i.e. uptrend in the dollar) that began in mid-April reversed in mid-July. Then the prices began rising (i.e. dollar began falling). But that move ended September 8.   Stars of the most popular global market sitcoms, widely suspected of being “gold wave-makers”. From left to right: Auntie Janet...
  • 1987, 1997, 2007... Just How Crash-Prone are Years Ending in 7?
      Bad Reputation Years ending in 7, such as the current year 2017, have a bad reputation among stock market participants. Large price declines tend to occur quite frequently in these years.   Sliding down the steep slope of the cursed year. [PT]   Just think of 1987, the year in which the largest one-day decline in the US stock market in history took place:  the Dow Jones Industrial Average plunged by 22.61 percent in a single trading day. Or recall the year 2007,...
  • Stocks Up and Yields Down – Precious Metals Supply & Demand
      Where the Good Things Go Many gold bugs make an implicit assumption. Gold is good, therefore it will go up. This is tempting but wrong (ignoring that gold does not go anywhere, it’s the dollar that goes down). One error is in thinking that now you have discovered a truth, everyone else will see it quickly. And there is a subtler error. The error is to think good things must go up. Sometimes they do, but why?   Since putting in a secular low at the turn of the millennium,...
  • Tales From a Late Stage Bull Market
      Pro-Growth Occurrences An endearing quality of a late stage bull market is that it expands the universe of what’s possible.  Somehow, rising stock prices make the impossible, possible.  They also push the limits of the normal into the paranormal.   This happens almost every time Bigfoot is in front of a camera. [PT] Cartoon by Gary Larson   Last week, for instance, there was a Bigfoot sighting near Avocado Lake in Fresno County, California.  But it wasn’t just...
  • The 2017 Incrementum Gold Chart Book
      A Big Reference Chart Collection Our friends at Incrementum have created a special treat for gold aficionados, based on the 2017 “In Gold We Trust Report”. Not everybody has the time to read a 160 page report, even if it would be quite worthwhile to do so. As we always mention when it is published, it is a highly useful reference work, even if one doesn't get around to reading all of it (and selective reading is always possible, aided by the table of contents at the...
  • The Falling Productivity of Debt
      Discounting the Present Value of Future Income Last week, we discussed the ongoing fall of dividend, and especially earnings, yields. This Report is not a stock letter, and we make no stock market predictions. We talk about this phenomenon to make a different point. The discount rate has fallen to a very low level indeed.   We add this chart to provide a slightly different perspective to the discussion that follows below (and the question raised at the end of the article)....

Support Acting Man

Top10BestPro
j9TJzzN

Austrian Theory and Investment

Archive

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com