ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Lower Taxes plus Evasion

Lower Taxes plus Evasion Charvaka THE enthusiasm with which the business community has welcomed the Wanchoo Committee's recommendation to reduce the tax rates on personal income at all levels and in the process to bring down the maximum marginal rate of income-tax from the present 97.75 per cent to 75 per cent is difficult to understand. Surely, the intention of the Committee was not to provide tax concessions, but to check tax evasion. In the opinion of the Committee, "the prevalence of high rates is the first and foremost reason for tax evasion"If this is the logic of the proposed reduction in tax rates, then tax payers have little reason to be so jubilant about the suggestion, because when it is implemented they will be paying, if anything, more by way of taxes than they do now. Therefore, if the business community is jubilant today, it is because they are pretty certain that under the Wanchoo Committee's dispensation, they will have both reduced tax rates and tax evasion.

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