The annual exercise of the Union Budget has come up sooner than it usually does, a whole month early. Everywhere you look there are wish lists galore and economists holding forth on what needs to be done, what is possible, given political compulsions… the usual constraints.
The wait is soon going to be over: it’s not all that far away. As a tax paying Indian citizen, I have one major grouse: why am I ( and that includes a few lakh like me, too) supporting the huge burden of the state? Why not broaden the tax base so that more people pay tax, the burden is spread and more of us can then legitimately ask where our tax money’s going.
Of course, widening the tax base is easier said than done. But it needs doing on a war footing (the usual cliche for anything that needs to be done immediately) since a broader tax base will mean lower taxes at the bottom, increasing as the pyramid narrows. A lower tax rate at the bottom should or could transfer into higher compliance, leaving me with a little more cash in hand (so I can go and do some retail therapy, boosting the FMCG and other sectors).
It upsets me no end that merely because I and others like me are in the organised sector of the economy that tax is deducted at source (TDS) so that infrastructure like schools, hospitals, roads etc can be built. These are used by all of us but only a miniscule number of us pay for their construction and maintenance.
Larger segments of the economy are unorganised hence out of the TDS net, some of who may be paying taxes but perhaps at lower rates, admitting to lower incomes. Here’s a just look at the statistics for a high profile sector like automobiles: in the 12-month period April-March 2012-13, some 39 lakh people bought cars but only 4 lakh paid income-tax above Rs. 5 lakh in that year. You get what I am saying?
So we generally know which sectors have a higher percentage of tax avoidance or paying lower taxes. Transactions around land comes to mind first as a segment which could be targeted for higher compliance and with digitisation, brought on by the recent scrapping of Rs500 and Rs. 1000 notes, that ought to be easier.
Education, healthcare and better communications, in the form of road, rail, port and air services are sectors that require huge investments. For too long, investment in infrastructure has tended to mean infrastructure in physical things like roads, etc. Yes, these remain important: after all, look what the Pune-Mumbai expressway has done for the economies of the villages that dot the road. But the softer infrastructure like schools and healthcare facilities, require urgent attention: they need to be improved for better results and some of them actually do require more money.
Where is that money going to come from if not from taxes? The poor, who’ve been gulled into thinking they are not paying tax merely because they are not paying income-tax are actually paying a heap more thanks to indirect taxes. Instead, if they paid (lower) income-tax, they’d have a legitimate right to ask for better services.
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