Re: Shut down Excise Dept

[Charu datt <charu@ix.netcom.com>]

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Administrative Note:
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Week's Agenda: Political & administrative reforms
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Manoj Padki wrote:

> We need a law along the lines of the Interstate Commerce law in the US. It
> basically says No taxes for commerce between 2 states.

This is a good idea, but note that for many local governments octroi/local
excise is
the only funding they have, pointing to a more fundamental problem of the
control
of tax collections. If I understand it correctly, [the ex IAS people will know
this much
better, please correct me if I'm wrong], the central govt collects taxes and
pays
only what it pleases to states. The state capital bureaucracies decide how much
of that goes to which local body in an arbitrary fashion. Local/municipal govts
are entirely at the
mercy of state govts for any funding at all so they resort to the "highway
robbery"
called octroi.

Abolition of octroi needs to be accompanied by well defined rules for funding
local governments with a collection system less prone to corruption.
Looking to alternative systems for examples, in the US, local governments
are financed by property taxes and fees for local services- water, sewer.
AFAIK, we don't have property taxes in India, and local services are heavily
susidized
so they're hardly a likely source of funding for governments to run.

Any ideas?

-Charu

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