June 8, 2009

Making Rich richer and Poor more poorer

Earlier I used to wonder in my disbelief that how people sitting in powerful positions can take such decisions, which have adverse effects on society at large. But when government announces such decisions it appears that probably collective intelligence in not better than individual thought process.

Today’s paper says government of Uttar Pradesh is slapping approximately 1% special tax on some basic food items coming in the state and waive approximately 3-4% entry tax on consumer durable items like TV, Computer, Fridge, etc.

What is this? People buying luxuries would be required to shell out lesser money, which other wise has not affected their purchase decision. BUT the common man, who is struggling hard in present recession to make his ends meet, would be required to spend more on his basic necessities especially on food items. This is wrong, in my opinion. The poor would be spending more and thereby getting deprived of chances of savings and improving his financial health. At the other hand people going for these luxuries could have paid this extra amount without any thought. And this small unwanted savings of Rich would again be spent on some luxury.

So, I want to know the simple logics for this taxation funda. There must be one.

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