Sir, the duty on electricity is, in principle, a bad
tax. I am one of those who believe that the use of electricity ought to be
encouraged more and more, because in the absence of electricity, people
would use kerosene oil which causes smoke which is injurious to
health and that ought to be stopped in the best way possible. The only
way to discourage the consumption of kerosene oil would be to make electricity
as cheap as one can possibly make it. Therefore, my submission is that, on
general principles, this is a bad duty. My second comment on this part of the
taxation proposal is that it is a tax which is badly distributed. One
of the most120
extraordinary things that one notices about this electricity tax is that
there is no increase in the tax on the140 energy used by cinemas and theatres.
Sir, I should have thought that if there was any individual tax,
it was160
certainly on the cinema and the theatre. It is because, if a tax was levied on
the cinema or on the theatre, its burden would certainly be passed on to
persons who go to theatres and to cinemas. That would be taxation on
luxuries and I am sure that instead of spreading the tax, as the honourable
Finance Minister has done upon householders, if he had increased the
rate upon cinemas and theatres, he would have got all the revenue240
that he intended to get out of this duty.
With regard to the third item of taxation which is, Stamp Duty on
Conveyances, the increase is quite unjustified. In Bombay City, the honourable
Finance Minister proposes to increase the tax280 from 3 per cent. to 4
per cent which is an increase of more than 20 per cent on the present basis. In
Poona and Ahmedabad, he proposes a tax from 2 per cent to 3 per cent, which
is also320
an increase of more than 20 per cent. In other towns, which are to be notified
by the Government, the tax is to be raised from 1 per cent to 3 per
cent, which is an increase of more360 than 50 per cent, and in the rest of the
towns it is to be raised from 1 per cent to 2 per cent. Reading the honourable
Minister’s Statement of Objects and Reasons which is attached to the
Finance Bill, I do not find any explanation as to the justification
for the increase of this taxation. All that the honourable420
Minister chooses to say is that it is considered desirable that the
stamp duty for conveyances should be higher in urban areas than in rural areas.
Why are the urban areas more sinful that they should be made to
pay more than what they have been paying so far? We have had no answer
from the honourable Minister at all. 480 It is a simple arbitrary Act saying
that the tax shall be increased without any rhyme or reason.
Sir, now we come to the fifth proposal, that is the Property
Tax. This of course, is the crux of the whole taxing proposal. Now this
proposal, to my mind, is objectionable from the various points
of view. My honourable friend has already pointed out one of the
objections to this measure, that this Government is now encroaching
upon a basis560 of taxation which has hitherto been left for the Municipal
Governments. The Bombay City Municipality derives a large part of
its revenue from taxation on property. Not only the Bombay Municipality derives
its revenue from property tax, but similarly all the600 City Municipalities
are allowed to levy a tax upon property. Sir, this competition by the Government
into a field of taxation which is reserved for municipal bodies will
prove greatly detrimental to the growth of local self-government.
I will not640
say anything more on that point. But I will refer to certain other aspects
of the proposal and the first aspect is this. The tenants of the Bombay City
have been carrying on an agitation that the rents in the City of Bombay are abnormal
and that they should be reduced. Now, if the Government, by this
measure of700 taxation, is going to take away 10 per
cent of the value of the property, it should not in the same720
breath say to the landlord that he shall also reduce the rent of the tenants
who have been agitating against the present high pitch of rent.
Therefore, what the Government is doing is really nothing more than
defrauding the tenants of the Bombay City, and similarly of Ahmedabad, by
taking away from them what was legitimately their due. I think that is
certainly one of the most serious objections that can be urged to
this measure.
Secondly, this property800 which is to be the
subject-matter of taxation under the Government proposal cannot be
said to be property which is not subject to taxation now nor can it
be said that this is a property which has been lightly taxed and, 840
therefore, can still bear a higher taxation. Let me take the case of Bombay
City itself. The Bombay Municipality levies on the whole 18 per cent on the
rateable value of the property for its own use. In addition to that, the
owner of the house has to pay the ground rent if the property is
a leasehold property. In addition to that, he has to pay income tax to
the Government of India on the income which he derives from the total
rental of his property. Taken all together, this burden would certainly come to
about 23 per cent. My honourable friend is saying that it would
come to 50 per cent; he will probably explain it later on. 960
What I point out is that it cannot be said that this property is
a lightly taxed property; it is980 a property which is already
heavily taxed and, therefore, it will be very unjust to impose upon it a
further burden of 10 per cent.
The next thing that I should like to
point out to the honourable Finance Minister is this. He seems to treat this
tax as though it was just a rate and not a tax. Well, I have a quarrel
with him on that point. What he is levying is not a rate but it is a tax. The
difference between a rate and a tax is this. A rate is something for which
you get1080
specific service. We pay rates to the municipality because in return for
what we pay to the municipality we get direct services like water, conservancy,
lighting, and various other services. It is really a charge for the services
rendered, but1120 in the case of what the honourable
Minister is doing, there are no services. Therefore, it is a tax. Although the
Minister chooses to call it a tax on property, it is a tax on income, because I
do like to tell him that nowhere things pay anything. In all ultimate analysis,
it is the man who pays; things do not pay. If men pay, they pay out of their
income. Therefore, it is an income tax. Now, I would1200 like to ask the honourable
Minister why the equitable principles which are always recognized to be the
part of a general scheme of income tax are not made the part of this tax? Two
things might be mentioned. One thing that needs to be mentioned
is that every scheme of income tax has in it a basis of exemption. 1260
Below a certain minimum you do not tax. In the present day income tax,
the minimum, I think, is about1280 Rs. 2,000. If this is an income
tax, and I insist and say that it is an income tax and nothing
else, why is it that there is no exemption? It is no use lumping all
landlords together. I live in Hindu Colony; there are many people who have
drawn their gratuities from the Government, there are many people who
have received certain accumulations of provident fund. These people have
built small houses. In a part of the house they live and in the remaining part
of the house they have tenants. These people pay ground rent; they pay
municipal taxes. Is there no consideration for them? Then, there are several
people who have invested lakhs and lakhs of rupees1400 in buildings and who
are doing nothing else but living on the income derived from these properties.
I say there is a distinction and a distinction ought to be made between
a landlord of one type and a landlord of1440 another type. Why is
that distinction not made here?
Let us now take another consideration. A great number of
these properties are certainly properties which belong to charitable organizations.
Take, for instance, the Bombay City. Here, we have the Social
Service League, the Servants of India Society and there are many
other organizations which can be mentioned which are catering out of
the income that they get for rendering assistance to poor widows, to orphan
children, to the people who have had no education and giving them medical aid. I
cannot understand why a Government like this which has repudiated its
responsibility with regard to all social services and has thrown the
burden upon the public to provide for such services out of charity,
should not show any exemption for charitable organizations. Even the Income-tax
Act says that income derived from charities shall not be subject to
taxation. I do not understand why none of these considerations have
prevailed with1600 the honourable Finance Minister. I
am sure he will have something to say when we consider the Bill
itself.
