z:\ ambedkar\vol-02\vol2-10.indd MK SJ+YS 21-9-2013/YS-8-11-2013 773
EVIDENCE : RIGHT HON. SIR SAMUEL HOARE AND OTHERS 773
- Dr. B. R. Ambedkar: The next question I want to put to you, arising out of that, is this : that if that position is maintained or even the position as it is under Proposal 141 is maintained, would it not be the fact that the Federation will have to carry on its finances entirely on the basis of indirect taxation ?
Sir Samuel Hoare: Not entirely on the basis of indirect taxation.
- Dr. B. R. Ambedkar: To a very large extent ?
Sir Samuel Hoare: Obviously, to a large extent. Indirect taxation will then, as it does now, play a very prominent part in the Indian revenue.
- Dr. B. R. Ambedkar: What I want to put to you is this, Sir Samuel Hoare, that it will be more so under the Federation than it is now, for the simple reason that the British Indians would not consent to direct taxation, because the States will not consent, and, consequently both of them would rather go in for indirect taxation, to be borne by both apart, rather than agree to direct taxation, which would be borne by British India alone. From that point of view indirect taxation would be more and more forced upon them than is now the case ?
Sir Samuel Hoare: From the other point of view, I can imagine the States very often on the side of the less indirect taxation.
- Dr. B. R. Ambedkar: That is because they do not have their finger in the pie now. Would it be the same thing afterwards when, if they are opposed to indirect taxation they have to bear the brunt of the taxation ?
Sir Samuel Hoare: Dr. Ambedkar will also remember in this triangle of forces that the Provinces will have an interest in direct taxation, as they have a share in it.
- Dr. B. R. Ambedkar: Yes, that may be so, but the Province also will see that the Federation is not entirely a charge on Indian Revenue raised in British India. It is a pure matter of speculation, but I want to pay attention to what would be the drift of the finance under the Federation. If I may say so, the Federation would entirely have to build a tariff wall round itself in order to carry on ?
Sir Samuel Hoare: Dr. Ambedkar says it is a subject of speculation. I am inclined to agree with him, but I am not inclined, having assumed it is a subject of speculation, then to prophesy exactly what is going to happen.
- Dr. B. R. Ambedkar: I will leave it at that. The next question I would like to ask of Sir Samuel Hoare arising out of the same proposal,
141, is this : You said that the States will contribute an equivalent amount to the Federal Revenues on a sum to be assessed on a prescribed basis. Of course, you have explained this morning how the word “prescribed” is used, and I am not going to ask you any questions upon that, but what I would like to ask you is this. Is there any provision made in the White Paper to see that the sum assessed on this prescribed basis, which becomes payable by a particular State, will be ultimately paid to the Federation ?