So, I Was Thinking About This GST Thing..

GST

 

The government is going to streamline taxation and stuff. I think it’s great.

GST is an Indirect Tax, which is very different from a Direct Tax. Analysts and financial people understand the difference. I haven’t been raised to care about the difference.

All I have been raised to care about is that if there is any tax of any kind, go right out and pay it first, and then ask questions.

Let me explain. The way I understand the world: Rich people sort of run things and political parties have to keep their requirements in mind, always; Poor people are busy trying to survive but their aspirations and angst are useful tools in the hands of political parties before and during elections.

The Middle Class – usually – has no political blessings, and therefore is tied to all the tax systems – manual, digital, or any other type.

And so, Middle Class families raise their children to become employees, pay taxes, stand in line, and after the best years of life have passed, enjoy retirement – which translates to an additional 0.25-0.5% on fixed deposits, and sundry other incremental benefits. Middle Class education is all about working for money throughout productive life, saving a tiny morsel, incrementally, and then squeezing a drop of satisfaction out before death.

There are Middle Class children who think of sports and music and art as a career – which means to get into Services or Railways or a great private company (as an employee) on the basis of sports. It is changing I am told. Middle Class kids are becoming entrepreneurs apparently. I wouldn’t be surprised if many of them are among those shutting shop all across the country the last year – I believe it will take some time before the masses of Middle Class start thinking in the manner that enables success in business and sports and artistic fields. You see, Middle Class kids think that mastering the talent is the crux of being successful. Become a great batsman or a guitar player, have a great business idea and the world will recognise your genius.

Meanwhile, the Upper Classes (or: people who are used to success as a lineage or heritage, a birthright even) are raised to become entrepreneurs, business people, politicians, sports-persons, inventors, artists, and the like. They are educated to go out and conquer the world and ensure they generate awe, wealth … and employment for others. Their education gives them the advantage of knowing the difference between working for money and making your money work for you, preferably other people’s money that is usually so easily available as funding through banks and financial institutions. And, if all the debt doesn’t quite add up, how to get it restructured. This is ‘knowledge is power’ at work. Children from such backgrounds are usually good at a sport and art or two, and they are likely to be thinking: Let me own a team.

The Poor are too occupied trying to survive to care about any of this. Those that are not so poor, are too deep in debt to have time to care. Those that are not so deep in debt are able to stand in line (formed by concerned politicians looking to get back into power) to get the subsidies that the government keeps aside for them. Pretty much knowledge is power, again. The focus of poor people is to have something of their own, a trade or a tin-shed business that will afford them some independence from the shackles of poverty.

I think GST is great because this might be the first time that a tax reform is coming in sync with other developments (digital finance, mandatory declarations / linking of PAN for transactions above certain value, Aadhar, etc). And the reform is that it is unifying indirect taxes into one tax. And all of this put together means that we will see new data about the pattern of consumption across all the population. Because indirect taxes are all about consumption of goods and services. Which in turn means that this government is attempting to unify everybody under one trackable financial system.

What does all this have to do with the Middle Class? Not much actually. They are used to paying taxes at every stage, so I don’t see much scope of additional revenue from this already squeezed class.

But for those classes of consumers who have been buying and selling goods and services in cash or through offline methods/markets or through multiple layers of intermediaries, GST may be a different story. And that’s where the classless credentials of this government’s financial reforms kind of show up – I believe it is aimed at making more people pay taxes by reducing system inefficiency and loopholes.

Meanwhile, (like other Middle Class people), I am busy checking with my CA how I have to comply with GST.

 

#The views expressed in this column are the authors

Sanjay Mukherjee

Sanjay Mukherjee

A Thinker, Writer, and Mountain-Walker,
Sanjay Mukherjee is a Pune-based business consultant. He is Founder of RedstoneSummerhill and The Mountain Walker and also serves as Chief Strategy Advisor for the Hong Kong-based learning technology company, Peak Pacific Limited
Sanjay Mukherjee

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