III The Role of Govt in Ideal Economy

We know that in Pure Capitalism the role of govt is to only collect taxes and maintain law and order and to take care that the contracts made between the persons should be properly followed. Just opposite of it is in Communism that all the business is done by Govt and and all the people work as the labours of govt.
But in Humanistic Capitalism neither the govt takes taxes on businesses nor it takes over all the businesses of the country. But instead the Govt do such few businesses which are useful for the development and maintenance of the civilization and which help to join one place with another place and one person with another person. Let us see the various aspects of the govt in the Humanistic - Capitalism. Let us first discuss about taxation which is considered as an essential part of govt and which the humanistic capitalism is prohibiting and the Govt businesses which we are supporting.

A) Purpose of Tax System

The purposes of the tax are following

1. To maintain the huge structure of govt and bureaucrats -The main purpose of taxation is to accumulate funds for the functioning of the government machineries. No government in the world can run its administrative office without funds and it has no such system incorporated in itself to generate profit from its functioning. In other words, a government can run its administrative set up only through public funding which is collected in the form of tax. Therefore, it can be well understood that the purpose of taxation is very simple and obvious for proper functioning of a state. Taxes are charges levied against a citizen's personal income or on property or for some specified activity.

2. Provide Services - To provide services like policing, public work, infrastructure development to the citizens.

3. To protect the whole system (i.e. keeping military, intelligence etc or any such departments which are necessary to prevent such phenomenon which are harmful to the whole structure.

4. Improve employment at all industry verticals

5. Induction of modern technology in to the system

6. Rationalization of terms and condition of the economic system

7. Rationalization of employment terms and conditions.

8. Developing Citizenship - There is one additional reason of taxation and that is to remind people that they are the part and subordinates of a structure. It creates a feeling of citizenship in them.

B) Demerits of Taxation

1) Taxation Cost – A very important factor which has to be noted in taxation is the “Taxation Cost”. Due to taxation cost the actual benefits of taxation are not realized. Atleast 25% of the collected tax is spent on its collection itself. And in return of that 25% , public and nation get nothing but a structure called ‘ Income Tax Department’. Whose actual contribution in development of nation cant be calculated exactly.

2) Deterioration of Nations character - A lot of corruption is done by both Tax-Payers and Tax collecting officers. This corruption deteriorates the general moral level of public and turns the nation into a bunch of wicked, cheap persons.

3) It creates a burden on the budget of the people. We have seen in various historic phases that how heavy-taxation has destroyed the condition of general public. (However proportionate income tax is a solution of it but that is also very difficult to apply practically).

C) Business by the govt vs. Tax

Instead of Tax collection, govt should do such few businesses which help to join one place with another place and one person with another person(like railways, roadways, telecommunication fuel production, electricity etc).The reasons to do so are following–

1) Instead of merely watching the society the Govt will positively contribute in the development of the civilization.

2) There are high profits in the above businesses and when private parties do these businesses they keep these high profits for themselves and they become super rich on the cost of poverty of general public. When govt will do such businesses it will help in prevention of poverty on one hand and extreme richness on the other. It will prevent the class difference in society.

3) Instead of giving mere ‘Income Tax Department’ the govt is giving a real product/service to the public and nation

4) People will have no need to hide their real income. Thus moral level of people will remain high.

5) People will not have to pay their money for an indirect product (like military, police etc or other so-called services which people cant realize at the time of paying money), but they will pay money for a service which they are getting immediately.

6) These are fields of national and strategic importance which should be operated by government and not by private companies.

7) Promoters of the private companies have the Greed to maximize profit instead of social responsibility, which leads to cut-off of employees which leads to unemployment of a large number of people.........On one hand private companies keep a very limited number of people and pay them a high pay scale (and stress). the less number of employees leads to heavy work load per employee which leads to stress which leads to mechanization of employees instead of turning them into good human beings or good citizens...........On the other hand they make a large number of people unemployed. Thus a large economic gap is developed in the society. This is totally unethical condition. Because in a society the income and wealth of all the people should be nearly equal.

D) Businesses of Govt

1) Businesses of Central Govt –

• Railway and Airlines
• Profitable selling of Fuels like Petrol, Diesel, Gas etc.
• Production & Selling of Nuclear based energy.
• One time tax on the vehicles at the time of their selling.

2) Businesses of State Govt –

·         Road transport (The buses which state transport will own will not be for public selling i.e. no private party will be allowed to own such buses and every part of such buses will be of such dimension that they cant be used in other vehicles). And secondly no private company will be allowed to run any transport company.

·         Thermal, Hydro and other non conventional electricity (except nuclear energy)

·         Tourist Packages

·         Entertainment tax including tax on Liquor

E) Competition of Govts with Govts only

1. Foul Practices by Private Firms – In all those sectors in which govt will do business, there will be no entry permission for the private companies and firms. We have seen that whenever govt competes with private companies in any business, the private companies bribe the govt employees and those corrupted employees work for the loss of their own business holding and they give profits to the private firms. For example in Roadways if govt also run buses in competition with private firms then private bus owners bribe the conductors and drivers of the govt buses. And those conductor/driver do not pick the travelers from the way and leave them to be picked by private buses. Even they sale the new parts of the govt buses to the private bus owners. It could not have happened if no private buses were there in business.

2. Competition among various governments – Thus instead of competing with private firms the govt should compete with the govt of other states. For example a national highway passing through various states will automatically compete with the other parallel roads in those states.

3. Inter-Zonal-competition - The Inter-Zonal competition should be promoted in those areas where two different governments could not compete. For example in railway the tracks could be divided into various zones and the performance and services of various zones could be compared on the basis of feedback given by the travelers.