Why We Need Transparency in Governance

10 Key Facts About Transparency that is available in USA

• Transparency requires listing all government expenditures online in an easily searchable database, providing the details of every tax Rupee spent. Ideal transparency websites provide a complete, itemized, and clear description of all expenditures, including but not limited to all contracts, vendors, and grants. All expenditures would have a detailed account of the payment’s purpose and who authorized the payment.

• Transparency fosters accountability in government.

• Increased public access to and understanding of government spending instills greater public confidence in elected officials.

• Transparency brings clarity and sunshine to the characteristically opaque process of government spending.

• Transparency serves as an x-ray machine, allowing people to look into the details of the budget books and understand where their tax dollars go – and to whom.

• Transparency implementation costs at the state level have varied, with most programs having minimal to low fiscal impact.  The benefits of transparency quickly make the cost worthwhile, and in the Internet age, there is no excuse to not post expenditures and financial data online.

• Transparency Laws are better than a Army of RTI activists, who waste their energy and sometimes life in searching for information, which should have been available without demand.

• Transparency alleviates the paper-heavy, inefficient File process, eliminates the unnecessary steps involved with Files, and allows the public to go right to the source.  This makes life simpler for all parties involved – including the government.

• Transparency offers a simple, effective, low-cost tool to put the government back on track and back into the hands of the citizens government ought to serve.

• Implementing transparency at all Five levels of government, whether in Centre, State, District, Taluk (or Corporation) and Panchayat , does not demand great effort; it demands basic respect for communities and taxpayers funding government operation.

India has the most Environmentally substainable lifestyle

Inhabitants of Brazil and India have the world's most environmentally-sustainable lifestyle and Americans have the least, according to a new study tracking global attitudes towards consumption and the environment.

The survey by the National Geographic Society establishes a "Greendex" -- an index measuring the economic impact of consumer lifestyle choices -- in four key areas -- housing, transportation, food and goods.

Overall, the survey determined that inhabitants of developing countries are most concerned about the impacts of their lifestyle choices on the environment, and made consumption choices reflecting these concerns.

Consequently their lifestyles had fewer adverse effects on the environment than people in developed countries.

The highest scores -- denoting the greatest environmental consciousness -- were found in Brazil and India, each tied with 60 points.

They were followed by consumers in China (56.1), Mexico (54.3), Hungary (53.2) and Russia (52.4).

Among consumers in wealthy countries, those in Great Britain, Germany and Australia each had a Greendex score of 50.2, while those in Spain registered a score of 50.0 and Japanese respondents, 49.1.

US consumers had the lowest Greendex rating, at 44.9. People in the United States are by far the least likely to use public transportation, walk or bike to their destinations, or to eat locally grown foods, the report found.

Americans also had among the largest average residence size in the survey, and only 15 per cent told the National Geographic Society that they minimise their use of fresh water.

Other low-scoring consumers included Canadians with 48.5 and the French with 48.7.

Researchers found that in general, people in developed countries tend to live in big homes, often with environmentally costly air-conditioning, own more cars, drive alone more often and use public transport only infrequently. They are least likely to buy environmentally-friendly products.

Inhabitants of developing countries, by contrast, were more likely to live in smaller homes, use green products and own relatively few appliances or electronic gadgets. They also were more likely to walk, cycle, use public transportation and live close to their most frequent destinations.

Source: Economictimes

WorldBank attempt to Malign India Tax

It was John Maynard Keynes who said, "practical men, who believe themselves to be quite free from any intellectual influences, are usually the slaves of some defunct economist...soon or late, it is ideas, not vested interests, who are dangerous for good or evil."

Whether this dictum is true or not, it certainly is not valid in the case of taxes. Surely, vested interests have played a significant role in shaping the tax policies in seeking and securing exemptions, preferences and concessions and thereby, complicating the tax systems and making them business unfriendly.

Indeed, in India, a fertile ground for their operation was created by the requirements of planning, pursuit of multiple objectives and discriminatory taxation required by them.

Taxes, like death, are inevitable, but they necessarily involve costs. These are the collection cost to the government, compliance cost to the taxpayers and cost of distortions to the economy.

The effort should be to raise the required revenues by minimising these costs. A growth-oriented tax system should focus on minimising compliance costs and resource distortions created by the tax system. Therefore, the best practice approach to tax policy is to broaden the base, levy low and less differentiated rates and keep the tax system simple and transparent.

It is also suggested that taxes should be on incomes and consumption rather than transactions and turnovers. The suggestion is also that the growth-oriented tax system should reduce the cost of operating in the formal sector and increase the cost of operating in the informal sector.

Unfortunately, in the hurly-burly world of politics, such noble considerations hardly find a place and most tax administrations in developing countries are insensitive to them.

According to the recent publication by the World Bank, "Paying Taxes 2008: The Global Picture," the Indian tax system is one of the most unfriendly to businesses in the world.

India ranks at 165 among the 178 countries and among the South Asian countries, it is the lowest (see the table).

This should really be of concern to policymakers and administrators in India if they have a developmental concern. But this has hardly raised any notice. The real question is whether the Indian tax system is really that bad or is it another advocacy by businesses or simply a sensational finding which merely deserves to be ignored.

The World Bank uses a simple methodology. It takes a standard modest-sized firm in every country and ranks the countries on the basis of three factors, namely, the number of taxes paid, the time taken to pay and total tax rate of all taxes paid by the company.

Ease of paying taxes rankings in South Asian countries:

Country	Tax payments	Time to comply	Total tax rate	Ease of paying taxes
Bangladesh	42	141	74	81
Bhutan	46	109	75	68
India	162	105	159	165
Nepal	93	143	35	92
Pakistan	138	156	80	146
Sri Lanka	163	90	153	158

The study includes all taxes - on income, consumption and capital taxes levied by all levels of government. The selection of the "representative" firm and technical data required for the analysis are provided by the PricewaterhouseCoopers.

Does the indicator really represent development orientation in tax policy? A close look at the methodology raises serious reservations on the relevance of the measure altogether.

First, in choosing the case study company, a number of judgements are involved. The entire analysis is based on the private data compiled by the company and not on data available in the public domain and there are serious questions of reliability.

Secondly, the very fact of choosing a consulting firm with known views as a partner should raise eyebrows. The argument that the same firm is used to collect the information everywhere and the biases, if any, would be random is simplistic. There is scope for using judgements and this brings in serious questions of comparability. The measure neither calculates the compliance cost nor the distortionary cost.

Doubts can also be expressed on the three variables chosen to determine the rankings. Surely, the number of taxes creates a nuisance value but is it such a major issue to firms? The time taken to comply with the tax in the study includes preparatory time, filing time and payment time. But the lower time taken is not the only factor determining the compliance cost.

Further, one can reduce the time taken to comply with the tax by paying bribes. There are serious problems with taking the total tax rate measure. It is measured as the ratio of each of the taxes paid to profit before tax of the company and aggregated for all taxes.

Thus, the ratio of customs, excises, sales taxes, property taxes, individual income taxes and corporate profit taxes to the profit of the company is taken as the total tax rate. This comes from the philosophy that tax is an evil and imposes only a burden and not a means of providing generalised externalities.

The question is, are the taxes levied merely to impose a burden or to finance externalities? Besides, the firm itself does not pay all taxes; it merely collects them for the government, be it a sales tax or income tax deducted at source. This study is yet another case of the World Bank trying hard to bring down its own credibility!

All this, however, does not negate the fact that the Indian tax system has significant compliance and distortionary costs and the tax departments will have to brace themselves to remove them to impart development orientation.

The introduction of Goods and Services Tax will be important, but reform does not have to wait for that. Clearly, there is a case for merging a number of state taxes such as entertainment tax, electricity duty, passengers and goods tax, entry taxes and luxury taxes on hotels with the VAT.

Similarly the central government can do away with taxes like security and commodity transaction taxes and cash withdrawal tax which increase the transaction costs of conducting businesses and hinder the development of the markets.

Most of all, the tax policy makers and administrators will have to change their mindsets and show greater sensitiveness to impart growth orientation.

The author is director, NIPFP

Source : Business Standard

Rural-Urban Divide

This divide is due to the Absense of Infrastructure in Rural India and a failure of indian Nation Building.