CAF's inter-active work-shop on Property Taxes, Water & SWM – A citizens’ Perspective

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murali772 - 17 February, 2011 | Bangalore | governance | property taxes | water, Waste Management

Citizens Action Forum, #31/1, 1st Floor, M K Puttalingaiah Road, Padmanabhanagar, Bangalore-560070, cordially invites you to an interactive workshop on
 
Property Taxes, Water & Solid Waste Management – A citizens’ Perspective
 

On Saturday, the 19th February 2011, at Senate Hall, Central College, Dr Ambedkar Road, Bangalore
 
Between 3.30 PM and 7.30 PM

Members of Resident welfare Associations of Bangalore, city MLA's, corporators and senior officials of BBMP and BWSSB are expected to participate. Registration is free.

Muralidhar Rao
 


COMMENTS

Unfettered Inheritance – The Root of the Rot

 

Professor Adam Smith, considered to be the founding father of capitalism and the free market had very strict views on inheritance and was acutely aware of the ill effects this could have in the system of economics that he was building and promoting.

 

The learned professor understood that with the passage of time, in a capitalistic economy there would be extreme polarization of wealth and opportunity that would start the irreversible breakup of the delicate social fabric of society. He thought inheritance was clearly justified only when it was necessary to provide for dependent children. Among those who attended Smith's lectures was the historian and jurist John Millar, who supported a change in the inheritance laws such that wills would be enforced only for a limited part of a person's property. Millar saw this as entirely compatible with a respect for property rights. He was joined in this, as in his enthusiasm for Smith, by Tom Paine.1

 

Thomas Jefferson, who described "The Wealth of Nations" as "the best book extant" on political economy, famously wondered at about the same time whether all hereditary privileges should be abolished since "the earth belongs in usufruct to the living." He could have been quoting Smith with those words: It is "the most absurd of all suppositions," said Smith, "…every successive generation of men have not an equal right to the earth."1

 

These worries about whether inheritance is justified at all have their source in a central principle of capitalist societies: the principle that social privileges should be earned, should be a reward for contribution to society, rather than handed out by government leaders or passed down by aristocratic dynasties.1

 

In 1935, Franklin Roosevelt took up the same crusade, striking out at great fortunes, again for moral as well as economic reasons. ``The transmission from generation to generation of vast fortunes by will, inheritance or gift,'' declared F.D.R., ``is not consistent with the ideals and sentiments of the American people. ``Inherited economic power,'' he continued, ``is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation which established our Government.''1

 

Today polarization of wealth and opportunity is an acute symptom in many societies that have ‘easy’ inheritance laws.  Some small groups in such societies, driven by greed, further accelerate the pathological polarization of wealth and opportunity. Such groups and individuals would think nothing of law and culture in the pursuit of their aims of amassing vast fortunes, with the sole purpose of passing it on to the next generation.

 

In fact, when, the compounding factor of inheritance is removed form the capitalistic system, what emerges is a form of socialistic system.

 

The ill effects of ‘surplus value’ become truly evident only when the wealth and position acquired by one generation is passed on to the next through unbridled inheritance.

 

The Situation in Pakistan

Pakistan is one unfortunate country where the serious ill effects of unbridled inheritance in a feudal society have become very clear. The polarization of wealth and opportunity is extreme and is tearing up the social fabric of society. The recent example of the Swat Valley brings forward what is in store for those societies that do not stop this polarization. We all know that the Swat valley in Pakistan was taken over. The fact is:

 

The entire Swat Valley was previously controlled by just 4 dozen landlords. The landlords and the elected leaders were mostly the same people, protected by a de-motivated and underpaid police force. 2

(Polarization of wealth and opportunities by unbridled inheritance)

 

It took the full might of the Pakistan Army assisted by the U S to regain the control of this valley.

 

The Situation in India

We have an Inheritance law that allows for vast fortunes to be passed on to the next generation. This for the Asian culture, which is highly family centric works like sweet poison. An individual in our society is programmed for the accumulation of wealth for the next generation, and behaves like a ‘dynastic slave’.

 

Of all the laws in our constitution, the law of inheritance is the one that is closest to the heart-mind of any Indian. This is the law whose true sprit is fully imbibed by our culture and we hold it as a scared right. This is one law, out of so many, that is engraved in the collective psyche and transcends all caste, creed, religion and social stature.

 

Yet, inheritance is a concession that a civilized society grants to its members, just as patents and trade marks, at no time, must the society allow a concession it grants to its members to damage society.

 

In our country today we see the serious ill effects of unbridled inheritance. It is the root cause of all and every corruption that aims to accumulate wealth, because the corrupt know that the wealth will be passed on to the next generation, who shall hugely benefit from its compounded value and who in turn, shall add to the kitty and compound it ever more.

 

The role of the law makers

The law makers in any society, amend the laws and bring in new legislations in order to nurture the tree of freedom. It is imperative, on their part, to locate the true focus of this evil and make changes, so that succeeding generations are spared the ill effects of unbridled inheritance.

 

The Role of Political Parties and their manifesto

The situation is just right to mention in the manifesto of political parties that the party recognizes the ill effects of unbridled inheritance and is committed to act, to change the law in a manner that is more suitable for the general good of society.

 

The change in this law would lead to a progressive and positive change in the current India psyche that provides the environment for corruption to perpetuate. This act alone, may give a clear and distinguishing edge to a political party that wishes to be benefited in the elections, as being the first to ask for a substantive change in the law of inheritance.

 

Our constitution has been amended a record number of times, so it may appear that a change in the laws of inheritance would be easy, but this would be resisted most strongly perhaps violently by the modern day ‘dynastic slaves’.

 

In other parts of the world

In the developed world large inheritance is taxed very heavily some times to the tune of 40%. In such countries a large reserve of wealth, is thus made available for the general good. The law is framed in such a manner, that it is an antidote to the evil of accumulation of wealth. Not surprisingly these nations have the best standard of living; the Scandinavian Countries are an example.

 

On the other hand, Brazil has very easy inheritance (2 to 4% tax) and is plagued by extreme polarization as also experiences very frequent economic and financial scams.

A comparison of the inheritance tax in some countries is given below: 3

 

Country

Inheritance Tax

Exemption Limit

India

ZERO % (Wealth tax at 1% if value > $ 32,000)

Not Applicable

England

40 %

$ 470,000

France

40 %

$ 182,000

Germany

19 % to 50 %

$ 367,000

Norway

20 %

$   38,000

Denmark

25 %

$ 302,000

Greece

40 %

$     7,000

Spain

7.65 % to 34 %

NIL

 

In India, The Estate Duty Act 1953 under which some inheritance tax could be collected, was repealed in November 1985, a few years prior to computerization in government revenue departments, banks and stock exchanges.

 

Way Forward

India is a nation with the largest proportion of young people both in numbers and as a percentage. The society must cater to and evolve a dream that gives hope to the people who will take the country forward.

 

A change in the laws of inheritance will bring forth so much wealth for the general good that our youthful society shall be invigorated with so much hope and energy that the foundation of a truly great nation would have been put in place.

 

Currently a change in the laws of inheritance is not a priority with any political party, though the party that puts this up first, will reap the maximum benefit.

 

The task looks arduous but I have hope in the fact that nothing is stronger than an idea whose time has come.

 

Adess Singh.                                                         adesssingh@rediffmail.com

 

 

References:

 

1. Adam Smith’s views and quotes of Former Presidents:                jeffweintrub. blogspot.com

 

2. Swat Valley Landlords:                                                                         ‘The New York Times’ and reproduced   by ‘The Hindustan Times’, 18th April 2009.

3. Tax on inheritance in various countries:                                         Globalpropertyguide.com

 


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