Commentary: On this, at least, investors and Indian Marxists agree (Bloomberg News via IHT)
The issue of agreement is that there needs to be some way of taxing agricultural income. A panel estimated that the govt was losing 10 billion rupees, or $220 million, a year from laundering of nonfarm income as agricultural income.
Plus the lack of any agricultural taxes has led to high taxes on manufacturing.
Sitaram Yechury, a politburo member of the Communist Party of India (Marxist) said in a recent interview that the rural rich need to be taxed.
However, the Indian constitution puts agriculture as under control of the states so any income from taxes on farm-income goes to the states. If the central govt wants the money it has to amend the constitution.
And the definition of 'rural rich' will also lead to much debates. Still this is a good start to discussions on an important issue.
Posted by Harshal at November 11, 2004 03:09 PMIt might be easier and more palatable for all and sundry to stop the subsidy on the most important stape of the richer farmers - get rid of the diesel subsidy. This will equal the playing field - at least somewhat. The richer farmers with their borewells and tractors will be forced to pay the market rate (plus duty) of the fuel. The more margina; farmers using oxen to plough their land will escape this tax. It won't make their lives easy - but at least they will not be harassed by tax collectors who will suddenly see a new avenue to profit from.
This will have the added benefit of removing the stupid subsidy that has created the weird, new and artificial market for diesel fuelled cars.
Secondly, farmers that use water should be taxed for their use of the supply. I am not sure that anyone in India pays anything for water. This is a commodity that is as necessary as food, and yet is taken for granted.
This may be vastly more difficult to inculcate - but a start could be made. And, again, richer farmers, with their larger lands, will be forced to fork up more.
These would be two simpler ways to tax the richer farmers.
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