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Business While the government can justify various anti-profiteering measures based on socialist principles, the rules and methodology need to be clearly stated.

Indias rules on anti-profiteering arent clearly identified. Credit: Reuters

Nearly 70years after B.R. Ambedkar and K.T. Shahdebated overwhether the Indian constitution should include the word socialist the former was in favour of a society being organised by the people of India, according to the time and circumstances anti-profiteering provisions present in the countrys plan to overhaul a broken tax system remind us of this very debate.

The primary objective of the goods and services tax (GST) is to remove the cascading effect of existing taxes, that is tax on tax. The core principle of the GST is based on the fact that the tax on any input or input service utilised during the process of developing a product or a service would have to be offset against the subsequent output tax paid. The seamless credit system has been formulated keeping the consumer in mind and removes inefficiencies in the supply chain.

However, what if an entity in the supply chain, for instance, a wholesaler, decides to take benefit of a reduced tax rate courtesy the GST and not pass on such benefit to a consumer by hiking up his profit?

To counter such undue benefit, the government inserted Section 171 into the Central Goods and Services Tax Act (CGST). Section 171 of the CGST specifies that any benefit availed through extra input tax credit (as against earlier) or a reduction in rate of tax on any supply of goods or services has to be passed on to the consumer commensurately.

India Incs primary objectionto anti-profiteering lies around the fact that it adds an additional compliance burden, and that more importantly, a reduction in rate of taxes of inputs or input services need not necessarily result in a proportionate reduction in the final price of a product or service.

While industry concerns are certainly legitimate especially after taking into account the Modi governments minimum government, maximum governance motto is there any mechanism to ensure that the consumer does become a beneficiary of GST?

Australia, Malaysia examples

Chapter XIX of the CGST, which deals with Offences and Penalties, does not provide for a mechanism to ensure a commensurate reduction in the final price of a product. Australia and Malaysia are closest international examples when it comes to understanding anti-profiteering measures. The Australian anti-profiteering measure was based on the net dollar margin rule method that is, if taxes and costs fell by $1, then prices should also fall by at least $1. The Malaysian example is formula-based and uses a net profit margin which considers the effect of net profit on a comparative basis with a base rate net profit. For instance, the net profit margin from April 1, 2015 to June 30, 2016 (excluding GST taxes) should not exceed the net profit margin as on April 1, 2016 (base rate).

On June 20, the GST council notified the Anti Profiteering Rules, 2017 (rules). The rules currently do not contain the methodology and procedure for determining whether commensurate benefit has been passed on to consumers. However, the language used mostly mirrors the Australian model. The rules contain the bare essentials of a statute with a three tier structure for determination of alleged anti profiteering with the apex body being the Anti-Profiteering Authority. Penal action under the rules can even entail cancellation of GST registration.

It should be noted that a substantial chunk of the basket of items in the consumer price index have been exempted from payment of GST. Stemming from experience in other countries, the inflationary effects of GST could be high in the initial years of its implementation.

To what extent is this justified? On the face of it, the government can certainly rely on the concept of a welfare state based on socialist principles to justify various anti-profiteering measures. The Supreme Court has also time and again upheld the concept of securing and protecting a social order which comprises of economic justice as well. When examined from the pointed perspectives of a consumer and from a tangible benefit to the economy, the anti-profiteering authority may well be justified.

Industry issues are focused around feasibility of the measures and its implementation, and potential harassment at the hands of the taxman. What could have been done perhaps is have the Competition Commission, which examines pricing in detail, study how the passing of commensurate benefit could be ensured.

However, from a legislative standpoint, the argument against anti-profiteering rewinds back to the debate on socialism, and importantly on an ideal which India arguably believes in as a legacy. Importantly, the rules have been worded from the perspective of a need-based manner, which mostly would be required in the case of oligopolistic markets. Given the vogue nature of the GST and the risk and accountability that the government has towards the second largest consumer base in the world, the government cannot be entirely blamed for introducing an anti-profiteering measure.

Taxation statutes are most susceptible to the slightest change in an economic environment a close case in point being the negative list of services in service tax wherein the government, in a single stroke, changed 18 years of grappling with an arduous memory recall exercise of adding services on a year-on-year basis to a catch-all means to cover all taxation services.

As a parting thought, had the wording of the statute been Input Tax Credit-Commensurate Benefit Rules, would industry reaction have been different?

Shubhang Setlur is a Senior Associate at Crestlaw Partners, a full service law firm engaged in corporate and commercial advisory, dispute resolution, real estate and taxation.

Categories: Business, Economy, Featured, Government

Tagged as: Ambedkar, anti-profiteering, anti-profiteering authority, Goods and Services Tax, GST, industry concerns, Socialism, tax discretion, tax terrorism

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Behind GST's Anti-Profiteering Provisions, a Legacy of Indian Socialism - The Wire

left-wing activists from around the country are expected to gather in Chicago from July 6-9

Planning strategies to take on Republicans and President Trump will be a focus, of course.

Campus Reform reported:

Profs gather to fight the right at Socialism 2017 conference

Marxist professors, including some of recent notoriety, are preparing for the upcoming Socialism 2017 conference, where they will strategize to build the left and fight the right.

More than 1,500 professors, students, and left-wing activists from around the country are expected to gather in Chicago from July 6-9 in hopes of fighting injustice and oppression while resisting the political system that spawned Trump.

The four-day event will feature more than 100 meetings addressing topics such as misogyny, Islamophobia, immigration, racism, and much more from a socialist perspective.

A workshop called How Capitalism Works and How It Doesnt, for instance, will make the case that because capitalism is a system based on incessant accumulation based upon the exploitation of wage labor, it also therefore contains within it the seeds of its own demise.

Other offerings include Mapping the Enemy: What Is the Alt-Right?, Marxism and Cultural Appropriation, Strategies for Anti-Capitalists, and Shut it Down? How to Fight the Right.

Many of the lectures, including the opening plenary, will be delivered by university professors, some of whom have become the subject of recent controversies related to inflammatory political remarks.

Read the rest here:
Marxist Profs Gear up for Socialism 2017 Conference in Chicago - legal Insurrection (blog)

So according to Bob Hughes (Weekender column, July 1), socialism is the answer to all our problems. Sorry Bob, but what a load of twaddle. Could you point me in the direction of any country which has become a paradise on Earth under a socialist system?

Lets take a quick look. The former USSR, millions of its own citizens murdered by the ruling socialist regime and forever unable to feed its people.

North Korea, ruled by a succession of insane leaders, has murdered millions of its own citizens and millions more dead from malnutrition and starvation because its socialist regime cannot feed itself.

The Peoples Republic of China, created by a madman who murdered millions of his countrymen and, again, millions more dead from starvation because its socialist system was unable to even grow enough crops to feed its people. This country is now a world power because it is a capitalist economy, by nature if not by name.

Cuba, a country ruled by a mass murderer who once again killed hundreds of thousands of citizens and kept his nation in the dark ages with his socialist ideals.

Cambodia, under the socialist government of Pol Pot once more millions of its own people murdered and millions more dead from starvation.

Today the socialist left of many countries like to point to the socialist state of Venezuela as a utopia, but this country is now a basket case and falling apart, because of yes, you guessed it socialism.

What else do all these countries have in common? They were, or are, all ruled by an elite few that have everything, while the rest of the population have very little and have no say in the running of their country.

If this is your idea of a great political system Bob, then you need your head read.

A. Abbott

So according to Bob Hughes (Weekender column, July 1), socialism is the answer to all our problems. Sorry Bob, but what a load of twaddle. Could you point me in the direction of any country which has become a paradise on Earth under a socialist system?

Lets take a quick look. The former USSR, millions of its own citizens murdered by the ruling socialist regime and forever unable to feed its people.

North Korea, ruled by a succession of insane leaders, has murdered millions of its own citizens and millions more dead from malnutrition and starvation because its socialist regime cannot feed itself.

The Peoples Republic of China, created by a madman who murdered millions of his countrymen and, again, millions more dead from starvation because its socialist system was unable to even grow enough crops to feed its people. This country is now a world power because it is a capitalist economy, by nature if not by name.

Cuba, a country ruled by a mass murderer who once again killed hundreds of thousands of citizens and kept his nation in the dark ages with his socialist ideals.

Cambodia, under the socialist government of Pol Pot once more millions of its own people murdered and millions more dead from starvation.

Today the socialist left of many countries like to point to the socialist state of Venezuela as a utopia, but this country is now a basket case and falling apart, because of yes, you guessed it socialism.

What else do all these countries have in common? They were, or are, all ruled by an elite few that have everything, while the rest of the population have very little and have no say in the running of their country.

If this is your idea of a great political system Bob, then you need your head read.

A. Abbott

The rest is here:
World's socialist 'utopias' - Gisborne Herald

Thomas Piketty seems to be the darling of 21st century intellectuals as Ortega y Gasset was of the 20th century. His masterly researched and written magnum opus Capital in the Twenty-First Century has been touted by both the European and the American left, and it is essentially Marx 2.0, or one might say Marx for the 21st Century. He showcases his erudition throughout the text, and one should note that his tone is not radical or revolutionary, but rather composed, intellectual and academic. He comes to us as the scholar, the professor, not the angry radical with his fist in the air, but one should not be seduced by his cerebral and congenial manner, as his ideas and sentiments are as pestilential as Mao Zedong, Karl Marx, Hugo Chavez, Fidel Castro and others of their ilk.

His aims are, among others, global registry of financial assets, global coordination of wealth taxation, and progressive wealth tax rates. One in The United States of America and in the West should be as concerned of this as others seem to be of Islamism and Sharia, and one might label his oeuvre Creeping Socialism. All elements of privacy would be eradicated in Pikettys dystopia (though he would term it a Utopia, I am sure), and the spirit of collectivism would triumph over the spirit of rugged individualism that we so cherish. Americans should always be on guard against the type of phrases that he uses such as the common good, the general interest and of course the oft-used the people, as all are precursors of Socialism. He notes, A tax on capital would promote the general interest over private interests while preserving economic openness and the forces of competition. (Piketty, 471) It should be stated that Frances 75% wealth tax that Piketty gushes over was a complete and abysmal failure and had to be rescinded, as the wealthy, the professional, and the accomplished French fled to Russia (Gerard Depardieu), the U.K. Belgium and Switzerland, among others. This same scenario played out here in America when California raised its taxes. The wealthy and accomplished hightailed it for Nevada, Texas and Florida.

Socialists and progressives seem to thrive in what The Great One at Yale Harold Bloom termed The School of Resentment though he meant it in a Literary sense against those who have attacked great works of Art based upon gender, race and class, but let us leave Literary matters aside and return to Piketty. One can well imagine Piketty, Cornell West, Elizabeth Warren and Bernie Sanders standing on a street corner together, having a cup of coffee, complaining about Trumps latest vulgar tweet, when a gleaming Ferrari pulls up to the light. Undoubtedly, they would resent the selfish capitalist showing off his wealth in such an ostentatious way and mention the struggle of working people and so on and so forth. Yet is not the spirit of America, the spirit of capitalism, to see that car and say Wow - how did this person attain that sense of success and how can I achieve it too? Maybe they could offer some economic-advice? The difference is that the Socialist resents whereas the Capitalist aspires, and is not economic aspiration in our blood as Americans? Did not our ancestors flee the class-based stratified societies of the Old World to seek economic opportunity - to go from being the help to having help - to go from toiling on the land as a serf to being the landowner - to go from paying rent to collecting rent? Sam Zell, the successful American capitalist, commented accurately that the 1% should be emulated, not resented, and I could not agree more.

If one studies the Cultural Revolution in China, one sees that the enemies of the Chinese communists were intellectuals, individual exceptionalism, rich farmers, rich landowners and private business interests. I remember when studying this thinking to myself that I aspired to be everything that the Chinese Communists and Piketty resent and despise. To read voraciously in my spare time so as to rival the intellectual habits of Oxford dons, to train maniacally in the gymnasia to attain physical exceptionalism that equals an ancient Greek sculpture, to one day own land as a landlord and/or farmer and to have private business interests. And I strongly believe that all Americans, and all men/women, should at least have some of these aims, be it to think for oneself not as part of a collectivist herd, to be an independent farmer like Jefferson or Thoreau, to be a rich landlord like Trump (even though you may not like him personally or approve of his political persuasions), or to be a rich investor like Warren Buffett/Charlie Munger. For to be rich is to be free. Munger himself comments, Like Warren (Buffett, not Elizabeth) I had a considerable passion to get rich. Not because I wanted Ferraris - I wanted the independence. I desperately wanted it. (Lowenstein, 75)

One should note however that the sentiments of Piketty, Warren and Sanders are not novel as this spirit of resentment is referenced by Napoleon Hill in his seminal Think and Grow Rich where he states, For more than twenty years it has been a somewhat popular and growing pastime for radicals, self-seeking politicians, racketeers, crooked labor leaders, and on occasion religious leaders, to take pot-shots at Wall Street, The Money-Changers, and Big Business. The practice became so general that we witnessed during the business depression, the unbelievable sight of high government officials lining up with the cheap politicians, and labor leaders, with the openly avowed purpose of throttling the system which has made Industrial America the richest country on Earth. (Hill, 60) Was he describing 1937 or 2017 ?

As America moves forward into the the 21st century it would seem obvious that we are going to face many threats with perhaps the top three being The Rise of China, Creeping Sharia (Islamism in general), and Creeping Socialism and while the first two will likely be more problematic, one should not discount the threat of Piketty and other academics/politicians who come not with all the Gold of Asia, with dirty nukes, but rather with a smile, a friendly mien, clutching Marx under one arm and Lenin under the other.

-Pietros Maneos, The American Capitalist,

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Against Thomas Piketty & Creeping Socialism - HuffPost

If immigrants ultimately voted mostly Republican, the Republican Party would be defending illegal immigration and Democrats would be demanding a wall and threatening sanctuary cities.

With this example of blatant hypocrisy and its implications in mind, we can frame a question: Why do we have a health system? We dont have a food system and people would die without food. We have mostly a free market for food, and the major health issue of the poor is not lack of food but obesity.

We have a health system because of the desire to create a socialist paradise and the demand of some incumbents to stay in office and consolidate as much power as possible irrespective of the outcome of the means.

We have a health system because of the constant propaganda and education of almost three generations of Americans that health is somehow different from all other life events and must be protected by a socialist state.

Many Americans still recoil at the idea, and so our elites keep coming up with health schemes that are bastardized bureaucratic nightmares so bad we can only assume they were designed to fail.

The major problem with health care in America is misplaced insurance. Surprised? Think about it. The elites solution: Nationalize health insurance and tie it up with hundreds of pages of bureaucratic mumbo-jumbo.

This is like solving the problem of young boys throwing rocks at windows by making sure they have smoother rocks.

There are only two solutions to health care. 1) Socialize it, or 2) reduce government interference and turn it into a free market.

A socialized health system would create the largest bureaucracy on the planet. Keep in mind bureaucracies do process, they do not do outcomes.

Consider some basic realities. Those who can pay have the power to choose. In a free market that is you. In socialized systems, that is not you. Why would a person want an unnamed bureaucrat leafing through thousands of pages of regulations making decisions that influence your well being and maybe even your life?

Where are the feminists on this issue? They have demanded control over their own bodies. In a one-payer system, you have no ultimate control over your body. You control nothing except who you vote for, and as recent history has shown that changes almost nothing.

In a free market a person has control over what happens to their own bodies when they pay the bills, not when insurance is paid for by your employer and especially not when it is paid for by a faceless government bureaucrat.

The cost of health care is now outrageously expensive, mostly because patients have been led to believe someone else is paying the bills. Obamacare and the Republican plan simply compound this misperception and rachet up the cost.

In a one-payer system, it appears no one pays the cost directly, even though the cost will bankrupt the nation in the long run. The immediate cost will literally be taken out of our bodies, and on this July 4th weekend, out of our freedom to choose.

Dennis Clayson is a marketing professor at the University of Northern Iowa.

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Socialism and GOP health bill - Waterloo Cedar Falls Courier