The way taxes are being collected so arrogantly by the government these days, one thing everybody must understand, the intent of the government is not only to increase its revenue through tax collections, but also to use it as a weapon against its own people.
Like it or not, it is a strong message to the citizens, who in the recently concluded general elections cut the government to size, that if you interfere in trimming my supreme power, we are going to make life hell through tax collections, a weapon that has successfully been deployed to keep the middle and salaried class on check over time.
The most terrible prey in this tax extortion is the timid salaried class, a miniscule percentage but takes a huge burden of the country’s expenditure. The salaried historically have never complained against the taxes they pay and are never known to demand any service from the government machinery, hoping things will improve with their taxes on their own. But things might be changing now.
So work pressure is not the only pressure the salaried class faces, they are also subject to tax torture, since they have very limited avenues to save tax. Also their income is taxed before expenses, unlike businesses, so the next time the salaried class finds it difficult to balance their budget or find their savings depleted they better know whom to blame. But here is the point, for how long are you going to milk the same set of people and expect them to remain silent. The savvy Generation Next has almost figured it out; it is just a matter of time, something is going to give way, it only has to reach critical mass.
When GST was introduced the most logical step most citizens anticipated was that personal income tax would be wound down, but the government smelt blood, they felt there is no lobby for these guys and nobody will really take up their cause, so the situation today is such that government has expanded taxation in every aspect of our lives, that even if some concessions are made they are always going to fall short of expectations. Which country taxes simultaneously on the income you earn, the capital gains you make, the big and small ticket purchases you do, and already there are signs that there will be some charge on UPI transaction so in effect a tax on your payments and after paying such a huge tax bomb, still not allow you to have a say in pointing out the flaws of the country and its system.
When GST was introduced the country was told that it is going to streamline the tax on the purchases we make, but babus staying true to their line of work have managed to complicate even that too. Looks like these babus, while framing the rules, take revenge on the thought entrance exams they have to endure to get the coveted job. Add to that, the egoistic politician who never likes to be questioned, so when a hotel owner asks a question on the GST rate differential on the cream-bun he sells, he is made to apologise privately and the apology then made public on social media just to send a message that even if the government takes stupid decisions, we have no right to question them. Who is the great guy in the government who decided to have two different GST rates on cream and bun thus complicating the GST rate when cream is applied on the bun? Such micromanaging and tinkering of rates is nothing, but a weapon used by the government to not only interfere in businesses, but to make things difficult for the citizens as much as possible. The goal is simple, keep the citizens busy so they only mind their own business and have no time to review the performance of the politician.
By the way, personal income tax collections have exceeded corporate income tax for two consecutive years. Goes to show the government’s affinity towards a set of people, or is it the case that the corporate has a strong lobby while personal taxpayers are typically divided and mostly die-hard fans of politicians, so taken for granted. It is in the interest of the corporate sector to also lobby for a massive cut in personal income tax because those who pay personal income tax are mostly corporate sector employees. No sane industrialist really wants his or her employees in financial duress even after paying a huge salary.
Employers better try and understand the pain points of the employees before suggesting weird 70 hours work week just to buttress the government. No point working long hours if the government is waiting to seize 30% of their income and then provide poor or no services in return. No wonder there is a big disconnect between employees and industrialists who have made it a habit to fall over each other to praise the government for trivial achievements, but are absolutely petrified to suggest the government reduce the income tax burden if not totally abolish it. Most employees feel they have to fend for themselves with nobody to lobby on their behalf, Narayana Murthy are you listening?
While the resident Indian faces the tax weapon and takes fire on so many fronts all at the same time, there is one set of Indians that are on a perpetual roll. That would be the Non-Resident Indians, no wonder when Indian politicians visit these foreign countries these NRIs go into some silly dance routines. Would be really fun to watch if their enthusiasm remains the same if the Indian government finds a way to start taxing them on par with resident Indians.
Meanwhile, there is an announcement made by the Finance Minister that the government is in the process of reviewing the Income Tax Act within 6 months by simplifying the tax laws. Simplification does not mean abolishing tax or making sure the babus don’t use it as a weapon on its citizens. Both are not happening for the simple reason that as a nation, we are not making enough noise on the tax issue; opposition included.
(The author is a business consultant)