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The Real Shankaracharya

India needs tax reform

Via EconLog, Amar Bhide points out:
India's financial difficulties stem from a badly designed and administered tax system. Rates and rules for personal and corporate income taxes appear reasonable by international standards. Nonetheless, India's government collects income taxes amounting to only about 3.7% of GDP, about half that in South Korea and the other Asian tigers.

I think Indian Govt. subsidies things like higher education unnecessarily. If a special tax is levied on those who choose public (tax-funded) higher education then it will reduce the burden on Govt. a lot. Similarly, agricultural income needs to be taxed. This, along with simplification of indirect taxes and investment in tax collection will be required to increase tax collection.


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