Today I was going through another post regarding the hike in petrol prices. Every time I go through the kind of posts / news regarding hike in prices or taxes etc. a weird thought comes in my mind quite often.
The govt. increases the prices of petrol & diesel, the rail fare for good, and not to mention the direct or indirect taxes; what does it leads to? The cost of manufacturing goes up for the companies and they pass it to the consumers by increasing the prices of their goods. To meet the increase in prices of goods (inflation), common man starts cheating on the taxes & wherever he / she could. Govt. loses revenue (due to it) & increases the taxes & prices of fuel & other raw material even further; & the cycle goes on.
I sometimes wonder, can this cycle work the other way round. Govt. decreases the taxes (for example) and the companies pass the benefit to the customer. Their purchasing power increases, leading to higher purchases (& may be less of cheating on taxes) & hence increase in govt. revenue. The loss is thus compensated & benefit passed onto next session. The cycle goes on till… Well here my mind goes blank. Of course not a very practical situation, but still not an impossible one either (I hope). But the question is, even if its theoretically possible, will it ever happen?
No comments:
Post a Comment