Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARDS :: Central Excise rule to resale the machines to a new company :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TAX RATES - GOODS TAXABLE @ 4% :: due date for vat payment :: articles on VAT and GST in India :: cpt :: list of goods taxed at 4% :: VAT Audit :: VAT RATES :: form 3cd :: empanelment :: ACCOUNTING STANDARD
 
 
« News Headlines »
 How to time your buys to have best of two tax regimes
 Here's why you must always check Form 26AS before filing tax return
 Want to file your income tax return after June 30? Having Aadhaar card is a must
 Timeline for filing of tax returns extended by two months
 Top 5 common mistakes to avoid while filing your income tax returns
 GST rollout on July 1: Deadline for filing tax returns extended
 What is GST?
 Income-tax (15th Amendment) Rules, 2017?
 Banks get a breather as GST Council extends deadline for tax filing
 Income Tax filing: Your easy guide in 7 steps
 E-filing income tax return: How individuals can upload any ITR using excel utility

inflation is also a form of taxation
February, 14th 2009

How to finance rural development? Some economists have suggested that the simplest way to finance development in developing countries is to print money or borrow from the banking system; in short, by deficit financing or controlled inflation, writes Katar Singh in Rural Development: Principles, policies and management,  third edition (www.sagepublications.com).

But, inflation is also a form of taxation, the author argues. It is really a tax on cash balances, since those individuals and organisations in the economy who hold cash balances see their purchasing power eroded by inflation, he adds.

There is, thus, a transfer of wealth from those who hold money in the form of cash balances to those who obtain the resources (in this case the government) through money creation. The government borrows heavily to finance spending, including that for rural development.

Singh rues that inflation tax which can be a politically easier way of taxing people than direct taxes affects hundreds of millions of people, though very few realise the same. Most people value their investment and income without adjusting it for inflation. This is what is called money illusion in economics.He reasons that inflationary (deficit) financing of the regular budget in the hope that a rising price level will in itself provide incentive for private investment in development projects is unlikely to be successful.

However, if the government undertakes a large-scale development programme, recognising that the level of deficit financing is in itself inflationary and mops up increases in income through tax policy, monetary policy and direct controls, then mild inflation can have a positive impact on economic development.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Development Software Programming Software Engineering Custom Software Development Requirement Based Software Development Software Solutions Software Serv

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions