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: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: due date for vat payment :: empanelment :: TAX RATES - GOODS TAXABLE @ 4% :: cpt :: TDS :: VAT RATES :: VAT Audit :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARD :: form 3cd
 
 
« News Headlines »
 8 benefits you must know about this tax-saving mutual fund
 10 most important income-tax changes which will apply from April 1
 Delhi: 54 CAs, company secretaries on radar in I-T crackdown against black money
 10 Income Tax Rules That Will Change From April. See Details Herea
 Looking for last-minute tax planning with Section 80C investments? Here's help
 Aadhaar mandatory for filing income tax return
 Will Aadhaar linkage solve India's income tax woes?
 GST roll out from July 1 will make goods cheaper: Jaitley
 Aadhaar To Be Mandatory For Filing Income Tax Return, PAN Application
 7 best tax-saving solutions which can help you save money
  No proposal to replace Income Tax with Banking Cash Transaction Tax

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