Raj Mathur wrote:
> The proposal actually has two facets: Excise or tax as a disincentive
> for deploying and/or bundling proprietary commodity off-the-shelf
> software (COTS) and as a way of generating revenue for promoting
> FLOSS. I agree with the first part -- makes perfect sense to me for
> the government to give incentives for hardware and software vendors to
> promote the use of FLOSS, prevent foreign exchange drain and generally
> better the lot of the users.
Excise, Duties, and other taxation should be an instrument of fiscal policy,
and should not be used to shape public policy. Since Manmohan Singh's 2nd
budget, the Govt has accepted this in general.. I know that taxes on tobacco
& liquor are raised citing "public policy", but these are abberations.
Taxation should be "non-distortionary", in the sense that it should not
change public behaviour. That is why we are trying to simplify the tax
code, to prevent people claiming low basics, and high medical
re-imbursements. These distort behaviour, encourage mis-reporting, and
generally keep the CBDT Tribunal busy. The move towards a "flat" VAT
structure is for similar reasons, taxes are levied for fiscal reasons; the
proceeds may be used to promote what the Government likes *explicitly*.
It is public policy not allow murder, but it is wrong to place a _tax_ on
murder.
It is public policy to allow free movement of goods, and it is permissible
to impose "highway taxes".
The two things are orthogonal. Taxes are levied to raise funds for the
Government. If something has to be discouraged, taxing it is the wrong way.
It allows the "rich" to get away with it, right? Fines are not taxes.
The revenues from taxes may be used as an instrument of public policy, of
course.
--
Sanjeev Gupta
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