DO TAXPAYERS UNDERTAKE ECONOMIC ACTIVITIES TO PAY TAXES?
Raman Jokhakar Editor
Hope you all had a beautiful Deepavali and a great start to the Samvat year 2078!
We have been seeing a much larger tax base in the last few years but we don’t see any specific ‘return on taxes paid’. There is no differentiation between a taxpayer and a non-taxpayer. When so few people pay taxes, I think tax cannot be an obligation but must be treated as an investment and taxpayers as investors in India.
On the other hand, taxpayer money is used to appease voters with freebees to the extent that taxpayers are thrown out of the system entirely. For example, if your child aspires to study medicine in Maharashtra, then you will be shocked to know that 74% seats are ‘reserved’, or rather awarded without merit. Reservation is a Government racket to strangulate a child to struggle excessively, or to get ejected out of the system for which his parents have paid, or the child goes out of the country, never to return. But it becomes vicious and ridiculous, once a student has done MBBS, then all pass-outs should be equal. But, even for MD, there is reservation. Government gives free seats to compensate its failure to give adequate education facilities to those who cannot afford it. So it gives out-of-turn seats directly. If Government gave money and extra classes for those who need it, so that they could compete, then one can build a meritocratic system that will give self-respect and not false entitlement. Reservation in most forms is racism and discrimination when it continues forever.
On the financial front, there are examples where Government extracts excessive taxes from taxpayers. Take the cost of buying a car as reported a while back. If a taxpayer wants to buy a vehicle worth Rs. 15 lakhs, she would have to earn about Rs. 21.42 lakhs because income tax takes away Rs. 6.42 lakhs. Out of Rs. 15 lakhs, the car dealer gets Rs. 9.8 lakhs only and Government ‘siphons’ off as taxes Rs. 5.2 lakhs. Add to it the taxes on fuel. On a retail price of Rs. 105.5, taxes amount to Rs. 57.2 (54%) and the dealer cost of petrol is Rs. 44.4 (42%). A sum of Rs. 3.9 is the commission per litre. Going back to earning this Rs. 105.5, a taxpayer needs to earn much more pre-tax. For other than ‘sin goods’, how can taxes be more than the transaction value?
Plus, let’s not forget that for Government nothing is enough – as per the MOS for Petroleum, the Union Government’s tax collection jumped 88% to Rs. 3.35 lakh crores for F.Y. 2020-21 from Rs. 1.78 lakh crores. This is also detrimental to encouraging consumption which is often the missing link in the virtuous cycle. Does Government take back as taxes what it spends? Imagine if taxes were reduced to 10-15% of the base value of cars for taxpayers. That would be some incentive or solace for paying direct taxes. And for those who believe Government can offer the best social services and taxes go towards that, one knows that Government is more often than not a benchmark of inefficiency and wastage, if you ignore corruption.
Facilities to taxpayers: They don’t exist. Most public services are paid for use by taxpayers: tolls, water, airport charges, train tickets or infra costs when you buy a home. Costs like defence must come from the massive natural resources that Government controls and not from the small income tax paying base. We should have reservations for taxpayers in top colleges in every segment, medical insurance top-up at any age for taxpayers who have paid taxes for 30 years or more, stamp duty set-off based on value add only for property purchase, fast track judicial service, and so on. Then we can even start to talk about honouring taxpayers. Till then, its harrowing taxpayers!