India needs to be less tax tolerant

When finance minister Arun Jaitley stated recently (while presenting the Union Budget 2017) that India is a “largely tax non-compliant society,” he was perhaps relying on another observation. That India is also a largely a tax-tolerant society. 

No matter what taxes are levied, our people, politicians and corporations will make noise for a couple of days/weeks, and thereafter accept the new tax rates and other measures and move on.

(This time too, the measured objection to the Budget announcements has come from industry bodies representing traders, select media experts, the opposition parties, and a handful of corporates.)

For a society that has, over the years, come to value money and encourage ambition, this behavior is worrying on several counts.

1) We are OK not knowing where most of our taxed income is being spent: This is no different from not knowing what your child is doing with his/her pocket money. Drugs, drinking, watching porn, incessant shopping, etc - everything is fine, as long as you send me a report that shows me how you have spent the money. And if the child presents a report with the following overheads - health drinks (a misnomer for drugs and alcohol), internet-based research (for porn) and marathon training (for "shopping for shoes and apparel") - we are fine. Of course, one can argue that we do have some visibility into how the government spends money. Charts, for instance show us the overheads. But beyond that, one has to spend several hours searching the internet for projects under various ministries (or worse, file an RTI query) to understand if there are any development projects that will directly improve their lives or not disturb them.

2) We prefer “no disruption” to “development”: Most of us taxpayers just look at our payslips, rue for a minute or so at the TDS part, and then move on to budgeting the income for the rest of the month. Anyone who publicly complains about the “injustice of taxes”, is showered with adjectives such as elitist, capitalist, pro-rich, anti-poor or worse anti-national. (As if we could have lasted 69 years of democratic rule being anti-national!) Ironically, no one questions why India remains a largely poor country despite years of paying taxes. These statistics from 2012 indicate that practically everyone in India is poor or close to poor, whereas in reality we know that may not be the case. Why don’t we push the government to track down these people and verify their declarations? If they can be approached for the census, they can also be called in for questioning.

The finance minister has mentioned several times about the need for more people to pay taxes so that the tax imbalance - a small group of individuals being taxed to support the larger population - can be reduced. This article clearly outlines what the government may need to do to achieve this. Yet, the government refuses to take the necessary steps. Taxpaying citizens too prefer to stay mum on the issue, fearing disruption to their personal lives, should they protest.

3) We don’t understand finance, taxes or the law: This makes the majority of us sitting ducks, should we ever face the income tax department or some litigation. Most of us are happy just doing our jobs, caring for our family and occasionally agreeing with the finance/law expert in our community/friend circle wherever such issues are discussed in the media. It took an online petition initiated by a salaried middle-class employee seeking a roll-back of the PF policy announced by the government last year, for most of us to click the “support” button and express our views. Personally, I supported the initiative because I was glad someone raised an issue that would directly impact me. I still don’t understand most of the points raised by the petitioner. However, it was not this petition in isolation that made the government roll back its decision. It was the agitation by employees of export houses (mostly garment workers) in Bangalore that was the final nail in the coffin.

Currently there are several other online petitions on income tax which haven’t been acted upon. What if many more of us were to raise such online petitions on income tax? Would the government listen to us? Or is violence the only path?

4) We would rather support issues that have little consequence to us than be seen raising controversial issues: Seeing how political parties tend to react to the Budget, I can safely conclude they don’t care about reducing income tax rates. Although why they would feel this way is unclear to me. After all, if people earn more, their propensity to spend more goes up and this will boost local economy. It is ironical how every political party swears by “garibi hatao”, yet doesn’t do anything to get its votebank out of poverty. That complicated issues with strong economic implications such as beef ban, Jallikattu ban and vandalising movie sets take precedence among political outfit cadres is baffling. Maybe income tax is too simple an issue to agitate on, when a biryani and booze bulk deal for goons (sorry party cadres) can do much more damage.

Considering most of us do not vote or care for politics, this should not bother us. However, seeing how much time we spend arguing on issues like beef ban, Jallikattu (several WhatsApp groups I belong to were on fire when the ban wasn’t lifted) or movie controversies (“Are they sleeping together or no” is what one friend asked after days of speculation on Facebook about two actors in a movie), how about we spend a tenth of that time on issues that directly impact us? Why does no one discuss “how to repeal taxes”, and instead talks of “how to save tax smartly”?

Contrast our behaviour with how communities in the US responded last month to their president’s recent orders. Citizens - of all ethnic groups - stormed airports condemning Donald Trump's anti-immigration order. The business community has come out strongly opposing the move and has mentioned the efforts (that could technically be construed as anti-national) taken by them to support the affected parties. They are also petitioning the government on proposed revisions in the H1-B programme.

What stops us from questioning our government? Our tolerance? Perhaps it is time we start by questioning our tolerance.

Also read: What Arun Jaitley did not tell you about taxes in his #Budget2017 speech