Monday, February 27, 2006

On the eve of the Indian budget

On the eve of the budget, no doubt there are going to be a slew of analyses, predictions, predelictions with the financial minister trying to do a fine balancing act on all accounts.

But spare a thought for the small number of income tax payers who end up financing the finance ministers coffers and then some.

...There is a flourishing illegal economy in India that remains out of the tax dragnet with only 20 million out of a population of more than a billion paying taxes. Other estimates put the level of economic activity determined by black money to the tune of 30-50%.

Self-employed lawyers, businessmen, doctors, designers, property agents and traders get away with paying a pittance as compared to the perpetually harassed salaried employees who have no choice but to pay up. Agricultural income, often higher than salaries, remains untaxed, given the politics of keeping farm incomes untouched.

Heres hoping then:

  • That the finance minister broadens the tax base to include some more 'poor' people like traders, real estate brokes, doctors and other 'poor' people as well.
  • That the finance minister taxes atleast rich farmers. Today not so rich salaried workers are taxed, but rich farmers are not.
  • That he ensures that all politicians pay their taxes, even if they are poor farmers.
  • That the honest tax payers are rewarded (with something) for their honesty, like roads, electricity, water and infrastructure.
  • That the salaried individual is not hit from all sides. After all he pays the VAT, the service tax and every other cess that the FM can think of and loses out on some subsidies as well. (Of course he earns 8 odd percent in the EPF which can be cut further down)
  • That, the not so vocal salaried tax payer is spared of some harrassment in getting his tax returns to the income tax office and there is some way of doing it other than having to stand in a maddening queue.
  • That the refund which I expect to get is actually delivered to me and not lost in the system.
  • That for all the tax exemptions, concessions, sops and subsidies offered all over, something is passed onto the salaried individual.
  • That for all the grandiose schemes into which crores and crores of money will be pumped in, better infrastructure is passed back and not empty rhetoric.

Heres a wonderful analysis by Sucheta Dalal on the disproportionate noise generated by big businesses that ensures that they get a good budget while the man on the street is left, where he is, on the street.

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