Vol. 2 · pages 41–45

22 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES proposes to continue for a year more, the additions made to the stamp duties and the court-fees sanctioned by the Bombay Finance Act II of 1932. Secondly, it increases the duty on the consumption of electricity. Thirdly, it increases the stamp duties in certain cities and urban areas on conveyances of immoveable property. Fourthly, it levies a tax on leases of immoveable property. Fifthly, it imposes a tax of 10 per cent, on the annual letting value of buildings in Bombay, Bombay Suburban District, and Ahmedabad City. And Sixthly, it imposes a sales tax not exceeding 6¼ per cent. on three items, namely, motor spirit or lubricants, manufactured cloth, and silk yarn. As I said, I do not propose to go into the details of these proposals of taxation. All that I am going to do now is to offer, in a summary way, certain criticisms which occur to me on general principles. Now with regard to the continuation of stamp and court fees, I would like to remind the Honourable the Finance Minister that this was a tax which, if my memory serves me aright, has always been objected to by Congressmen in the old Legislative Council. Sir, I do not remember a single Budget Session, when Congressmen did not turn the Budget Session into a kind of hardy annual between the Finance Members on the one hand and the Congressmen on the other. A tax which was fought tooth and nail every year, and where Congressmen themselves were not prepared to give this tax a perpetual lease of life should have now been thought by Congress Ministers themselves as a tax which should be continued ad infinitum, year by year is, to say the least, a bit of the same policy which Congressmen have been following now that they have got office, namely, that the things which were then bad are now good, because they are run by Congressmen. Very many examples could be cited of that kind of turn of mind. We know Congressmen who use to fight tooth and nail because the Executive was not separated from the Judiciary. They thought that was a most oppressive system and we have now the same Congressmen supporting that that was the most ideal system. I will not say anything more than that, but I should certainly like to point out that this is certainly contrary to the declared faith of all Congressmen. Coming to the duty on electricity, this is, to my mind, in principle, a bad tax. I am one of those who believe that the use of electricity ought to be encouraged more and more, because in the absence of electricity what people would do would be to burn kerosene oil which causes smoke which is injurious to health and that ought to be stopped in the best way possible. The only way to discourage the consumption of kerosene oil would be to make electricity as cheap as one can possibly make it. And therefore my submission is that, on general principles, this is a bad duty. My second comment on this part of the taxation proposal is that it is a tax which is badly distributed. One of the most extraordinary things that one notices about this electricity tax is that there is no increase in the tax on the energy used by cinemas and theatres. Sir, I should have thought that if there was any person or any individual tax, it was certainly the cinema and the

23ON BUDGET theatre. Because, if a tax was levied on the cinema or on the theatre it would certainly be passed on, if not borne by the consumer, upon the persons who go to the theatres and to the cinemas. That would be taxation on luxuries and I am sure, although, I cannot be absolutely accurate, that instead of spreading the tax as the Honourable the Finance Minister has done upon householders, if he had increased the rate upon cinema and on theatre he would have got all the revenue that he intended to get out of this duty. But as I said it is an extraordinary thing that the party which has got the broadest back to bear this is exempt, and what is done ? What is done is this : that those persons who were hitherto consuming less than 12 units are now taxed, and those who consume more than 12 units, their taxation is increased from 9 pies to 15 pies. Sir, I do not understand the equity of the distribution of this taxation measure. Why is it that people who were hitherto exempt because they consumed less than 12 units are now taxed ? Why is it that those who bore only 9 pies (5 Nps.) are now made to pay 15 pies (8 Nps.), while the theatres and the cinemas are exempted from the operation of this measure ? With regard to the third item of taxation which is, Stamp Duty on Conveyances, the increase, to my mind, is quite unjustified. In Bombay City, the Honourable the Finance Minister proposes to increase the tax from 3½ per cent. to 4 per cent. which is an increase of 20 per cent. on the present basis. In Poona and Ahmedabad he proposes a tax from 2¼ per cent, to 3 per cent. which is also an increase of 20 per cent. In other towns, which are to be notified by the Government, the tax is to be raised from 1½ per cent. to 3 per cent. which is an increase of 50 per cent., and in the rest of the towns it is to be raised from 1½ per cent, to 2, which is 33½ per cent. Reading the Honorabue Minister’s Statement of Objects and Reasons which is attached to the Finance Bill, I do not find any explanation as to the justification for the increase of this taxation. All that the Honourable Minister chooses to say is this : that it is considered desirable that the stamp duty for conveyances should be higher in urban areas than in rural areas. Why is it desirable, why the urban areas are more sinful that they should be made to pay more than what they have been paying so far, we have had no answer from the Honourable Minister at all. It is a simple arbitrary act saying that the tax shall be increased without any rhyme or reason. Then we come to the fifth proposal, that is the property tax. This of course, is the crux of the whole taxing proposal. Now this proposal, to my mind, is objectionable from the various points of view. My honourable friend Mr. Jamnadas Mehta has already pointed out one of the objections to this measure, and that objection is this : that this Government is now encroaching upon a basis of taxation which has hitherto been left for the Municipal governments. The Bombay City Municipality derives a large part of its revenue from taxation on property. Not only the Bombay Municipality derives its revenue from property tax, but similarly all the City

24 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES Municipalities are allowed to levy a tax upon property. Sir, this competition by Government into a field of taxation which is reserved for municipal bodies, I am sure, will prove greatly detrimental to the growth of local selfgovernment. I will not say anything more on that point. But I will refer to certain other aspects of the proposal and the first aspect is this. The tenants of the Bombay City have been carrying on an agitation that the rents in the City of Bombay are abnormal and that they should be reduced. Now, Sir, if the Government as it is going to do by this measure of taxation, is going to take away 10 per cent. of the value of the property, it should not in the same breath say to the landlord that he shall also reduce the rent of the tenants who have been agitating against the present high pitch of rent. Therefore, what the Government is doing is really nothing more than defrauding the tenants of the Bombay City and similarly of Ahmedabad and Poona by taking away from them what was legitimately their due ; and I think that is certainly one of the most serious objections that can be urged to this measure. Secondly, this property which is to be the subject-matter of taxation under the Government proposal cannot be said to be property which is not subject to taxation now nor can it be said that this is a property which has been lightly taxed and, therefore, can still bear a higher taxation. Let me take the case of Bombay City itself. The Honourable the Speaker: I am afraid there is a misunderstanding ; Poona is not included in this taxation proposal. Dr. B. R. Ambedkar: I am sorry—only Bombay and Ahmedabad. Now, with regard to the position in Bombay, what one finds is this. The Bombay Municipality levies on the whole 18½ per cent. on the rateable value of the property for its own use. In addition to that, the owner of the House has to pay, what is called, ground rent if the property is a leasehold property. In addition to that, he has to pay income tax to the Government of India on the income which he derives from the total rental of his property. Taken all together. I think all this burden would certainly come to about 22 to 23 per cent. (An Honourable Member : 50 per cent.). Well my honourable friend says it would come to 50 per cent.; he will probably explain it later on. What I point out is this that it cannot be said that this property is a lightly taxed property ; it is a property which is already heavily taxed and, therefore, it will be very unjust to impose upon it a further burden of 10 per cent. The next thing that I should like to point out to the Honourable the Finance Minister is this. He seems to treat this tax as though it was just a rate and not a tax. Well, I have a quarrel with him on that point What he is levying is not a rate but it is a tax. The difference between a rate and a tax is this. A rate is something for which you get specific service. We pay rates to the municipality because in return for what we pay to the municipality we get direct service—we get water, we get conservancy, we get lighting, we get various other services. It is really a charge for the

25ON BUDGET services rendered, but in the case of what the Honourable Minister is doing there are no services. Therefore, it is a tax. And, I say, although the Minister chooses to call it a tax on property, it is a tax on income, because I do like to tell him that nowhere things pay anything. In all ultimate analysis, it is the man who pays ; things do not pay. If men pay, they pay out of their income. Therefore, it is an income tax. Now, I would like to ask the Honourable Minister why the equitable principles which are always recognised to be the part of a general scheme of income tax are not made the part of this tax ? Two things might be mentioned. One thing that needs to be mentioned is this that every scheme of income tax has in it a basis of exemption. Below a certain minimum you do not tax. In the present day income tax, the minimum, I think, is about Rs. 2,000. If this is an income tax, and I insist and say that it is an income tax, and nothing else, why is it that there is no exemption ? It is no use lumping all landlords together. I live in Hindu Colony; there are many people who have drawn their gratuities from Government, there are many people who have received certain accumulations of provident fund. These people have built small houses. In a part of the nouse they live and in the remaining part of the house they have tenants. These people pay ground rent; they pay municipal taxes. Is there no consideration for them ? Then, there are several people who have invested lakhs and lakhs of rupees in buildings and who are doing nothing else but living on the income derived from these properties. I say there is a distinction and a distinction ought to be made between a landlord of one type and a landlord of another type. Why is that distinction not made here? Take another consideration. A number of these properties—I do not know how many but a great number of them—are certainly properties which belong to charitable organisations. Take for instance the Bombay City. Here, we have the Social Service League, the Servants of India Society and there are many other organisations which can be mentioned which are catering out of the income that they get for rendering assistance to poor widows, to orphan children, to people who have had no education and giving them medical aid. I cannot understand why a Government like this which has repudiated its responsibility—I am going to tell that later on—with regard to all social services and has thrown the burden upon the public to provide for such services out of charity, should not show any exemption for charitable organisations. Even the Income-tax Act, section 4, says that income derived from charities shall not be subject to taxation. I do not understand why none of these considerations have prevailed with the Honourable Minister for Finance. I am sure he will have something to say when we consider the Bill itself. Coming to the Sales Tax, personally I do not like it. I know there are people who believe that it is a good tax and that it may be levied. I have a different opinion about it. To my mind, it certainly smacks of what we in India used to have imposed upon the Indian mills, and what was called

26 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES the excise duty on cotton manufactures, from the year 1894. It cannot be anything else except that. If it is shifted by the manufacturer or by the salesman, it is certainly going to affect the consumer ; it is certainly going to affect his standard of living. If it is not shifted, if it is borne by the manufacturer himself, then it is going to affect the industry on which it is placed. In either case, it is not a very satisfactory piece of taxation. Now, Sir, I am one of those who have always held the view that good things of life do not fall from heaven like Mannat ; they have never done so anywhere. In fact, if you want the good things of life, you have got to pay for them. Unless you pay for them, you cannot get them. I am therefore, one of those who cannot have any conscientious objection to taxation, because I am certainly one of those who believe in having the good things of life and also believe in having to pay for them. The question, therefore, that we have to consider is this : What is all this taxation for ? What is the purpose ? What good the Government proposes to do by levying this taxation ? It is necessary to remember that the total revenue which the Finance Minister is proposing to raise by his scheme of taxation is 169 lakhs of rupees. Now, Sir, turning to the budget, one must first ask, what are the new items of expenditure which this budget includes ? Now, I have excluded from the budget certain items of expenditure which merely refer to administrative departments and do not result in direct benefit to what may be called the social welfare of the people. I have picked up from the budget such items of new expenditure which in my judgment may be said to be items which affect the public welfare of the people. I find that for irrigation the budget provides 7½ lakhs. For education it provides 16½ lakhs. Out of the 16½ lakhs, 5 lakhs are provided for the expansion of primary education, 5 lakhs are provided for buildings and 1.81 lakhs are provided for the introduction of what are called basic crafts. Then under public health there is nothing to report except an item of 5 lakhs for village water supply ; for agriculture there is nothing ; for co-operation there are 7 lakhs ; for rural development which of course means nothing more than the employment of 7,000 itinerary men who would be wandering all over the presidency carrying on some kind of propaganda which the Honourable Ministers think is going to be helpful to the people. Secondly, there is a provision for 2 lakhs for debt redemption. One thing I would like to point out is this : apart from the question whether the expenditure that is provided for in the budget is adequate having regard to the needs of the province, the one thing that this House should realise is this that new taxation is not at all necessary for the new expenditure. As the Honourable the Finance Minister himself has said in his budget speech, out of a total taxation of 169 lakhs, only 44 lakhs are supposed to be necessary for two schemes, namely, one for expansion of rural education and one for economic rural development. The rest, practically 125 lakhs, are not wanted for the new expenditure that the Ministry has in contemplation 125 lakhs is wanted by the Ministry for no other purpose than to wipe