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Fellas, it's time to learn basic economics, a subject that I'm actually qualified to talk about - https://twitter.com/maullajat/status/1385574970617704451
I'm not even getting into the 3% statistic. I unfortunately abandoned Econ (and subsequent deep dives into Finance) in favour of the incredibly sexy subject of Marketing but some basic things we should all know.
Especially if we're engineers who get away with second opinions and indoctrination via WhatsApp groups.
Broadly two kinds of taxes exist: Direct and Indirect.
There are about five different types of direct taxes, varying in their specifics, depending on whether you're an individual person or a corporate.
The important point of direct taxation - these cannot be transferred.
There are about five different types of direct taxes, varying in their specifics, depending on whether you're an individual person or a corporate.
The important point of direct taxation - these cannot be transferred.
The individual/entity upon whom the direct tax is levied is required to pay said taxes.
Consider income tax for instance. Depending on the slab of income earning you fall under, you're required to pay a certain percentage as tax to the goverernment. The maximum percentage charged is 30% I believe? And for incomes above INR 10L.
I'm referring this article for the slabs, these numbers will naturally have changed over subsequent budgets. https://www.policybazaar.com/tax/
However, this gentleman here (and surely many of you) forget that virtually every item we consume is subject to taxation too. That's where indirect taxes come in.
The ear buds/q-tips you use are stacked in a box with a label that states Maximum Retail Price. What's that all about? MRP is the highest price that a consumer is required to pay for said product. And yes, they include all manner of indirect taxes.
You see the problem with an indirect tax is the extent of inconvenience to the person paying it.
The same XYZ brand phone which sells for INR 18k takes away a smaller portion of income for a person earning 25000 a year vs a person earning 1L a year.
The same XYZ brand phone which sells for INR 18k takes away a smaller portion of income for a person earning 25000 a year vs a person earning 1L a year.
With me so far? So when you're shelling out a larger portion of your income to buy different products - not just a mobile. That Chik shampoo you like. Maybe you're a Hamam soap enthusiast. And in a pandemic free world, that Sunday movie with your family. Small pleasures -
But on a lower income you constantly weigh off the amount you can spend, versus anyone earning way more than you do.
And that is why indirect taxation is considered a regressive form of taxation.
And that is why indirect taxation is considered a regressive form of taxation.
It burdens the poor into spending a greater portion of their income.
Not to mention the additional category we have in India comprising taxes on entertainment, municipal charge, education cess, Swacch Bharat Cess -
Not to mention the additional category we have in India comprising taxes on entertainment, municipal charge, education cess, Swacch Bharat Cess -
And if you can think thus far, you can put 2 and 2 together to see that the purpose of said taxation is on public projects which require expenditure by the govt. They make their revenues by taxation and in an ideal world, would spend it on improving medical infrastructure -
And schools and making basic public services available to all sections of society instead of... Ahem. A 300ft high statue in the middle of nowhere.
Then again you do know that the poor labour doubly as hard to earn their income, for which they do not often get paid on time or have to haggle or do so under the most menial of conditions - all that labour to say that they don't deserve to be treated right? Please.
Oh and most importantly. I said that direct taxes have to be paid by the person (individual/entity) it was charged on.
Indirect taxes do not work like that.
Indirect taxes do not work like that.
The burden of payment (meaning the person who finally and actually pays) of the indirect tax can be shifted from the maker of the product to the final consumer.
I recommend this Wiki article for a Introduction to Indirect Taxes for Dummies crash course https://en.m.wikipedia.org/wiki/Indirect_tax
I recommend this Wiki article for a Introduction to Indirect Taxes for Dummies crash course https://en.m.wikipedia.org/wiki/Indirect_tax
If this was educational enough (aside of minor errors that may have creeped in, and at this moment I'm positive, haven't) feel free to buy me a coffee (COMPLETELY OPTIONAL): https://www.buymeacoffee.com/jayaajayjunior
I made a massive typo here but I'm sure the thread made the idea clear. The lower your income, the more money you shell out on goods.
Therefore the poorer you are, the greater the burden on you to pay Indirect Taxes. https://twitter.com/jayaajayjunior/status/1385604032815763462?s=19
Therefore the poorer you are, the greater the burden on you to pay Indirect Taxes. https://twitter.com/jayaajayjunior/status/1385604032815763462?s=19
