should the tax laws be reformed to encourage saving ?

TOPIC

Should the Tax Laws be reformed to Encourage

Saving ?

(AGAINST)

GROUP MEMBERS

1)Tripti Rai “115”2)Rachit Johari “52”3)Ashutosh shrivastav “112”

There are other ways to increase savings instead of relaxation in taxes.

LowerBudget Deficit !

BUDGET DEFICIT ? ?

The amount by which a government spending exceeds its income over a particular period of time is Budget Deficit.

REASON WHY TAX REFORMS SHOULD NOT BE DONE

• If taxes are reduced then governments budget deficit will increase.

• This means revenue collected by the government will be less and expenditure of the Gov. is high then the budget deficit will increase.

CONT…

• Larger budget deficit will shift the tax burden to the future generations.

•If there is high budget deficit this means the government is taking loans (Deficit financing).

DEFICIT FINANCING

PRINTING OF ADDITIONAL CURRENCY

GOVRNMENT BORROWINGS

PRINTING OF ADDITIONAL CURRENCY

•Reduces the buying power.•Causes inflation.

GOVRNMENT BORROWINGS

•Will drive up interest rates.•Credit will be expensive.

• Reducing budget deficit will give public the confidence that the Gov. will be borrowing less in the future there by lowering the rate throughout the economy.

• Which implies that taxes impositions will be less on people.

•Which will increase the savings and investments of people.

BENEFITS OF LOWER BUDGET DEFICIT

EVIDENCE

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

0

5

10

15

20

25

30

35

40

SAVINGSINFLATIONFISCAL DEFICIT

YEAR SAVINGS INFLATION DEFICIT

2006-07 34.6 6.53 3.3

2007-08 36.8 5.51 2.5

2008-09 32 9.7 6

2009-10 33.8 14.97 6.5

2010-11 32.8 9.47 4.8

2011-12 6.49 4.6

DATA

IMPLICATIONS

Lower budget deficit helps in: 1) Lowering inflation .

2) Higher savings .