This is with reference to the article "Three affirmative tax actions". Implementing the same would demonstrate the Government's earnestness in enhancing the underclass's employability and incomes.

First, allow an employment deduction from a firm's taxable profits. The deduction should be related to the payments made to the putative beneficiaries of CBR.

Second, cut the rate of direct taxes and surcharges of employees and the self-employed who are the beneficiaries of CBR.

Third, the magnitude of employment allowance and the tax cut or rebate should be directly proportional to the economy's growth rate. It would showcase its utilitarian approach to the accomplishment of growth objectives. Moreover, it would show that India has the courage to invest in its citizens and their economic future.

The author has rightly stressed that India needs tax laws that promote voluntary investments in human resources.

The three affirmative tax actions together constitute a powerful creative force. They serve the interests of the underclass, millions of self-employed, national economy and employers. It is apt and functional in an era where companies downsize and then outsource a large part of their operations.

It is hoped that the Prime Minister, Dr Manmohan Singh, and the finance Minister, Mr P. Chidambaram, include the tax actions in the Union Budget for 2005.

V. Krishnan

Chennai

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(This article was published in the Business Line print edition dated February 3, 2005)
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