India’s annual budget for 2017-18 takes forward the government’s crusade against black money, a process that was sought to be elevated to a new level by the demonetisation exercise in November, though there is increasing evidence now that it was a needless measure that caused distress to too many. Finance Minister Arun Jaitley’s fourth Budget has underlined the resolve of the government to continue the crack down on the evil tax evaders amongst us.

Many have peacefully co-existed for years in the form of traders and shopkeepers, but perhaps not contributed to the exchequer as much as they should by tinkering with their books and running their businesses mostly in cash. Jaitley has announced that high value cash transactions are going to be penalised while there has been an attempt to broaden the tax base. Jaitley as well as Prime Minister Narendra Modi have exhorted in various forums that those evading taxes will not be spared, cocksure that this is the kind of high-moral ground that obviously cannot be countered.

While the digital cashless direction that Modi & Jaitley want the Indian economy to progress towards may indeed be unquestionable, the government seems to be getting carried away by its sanctimonious and self-righteous position, in a clever attempt to buttress the politically expedient image as the do-gooder and protector of poor. In Jaitley’s budget, humongous amounts continue to be pumped into leaky and suspect rural employment programs such as MNREGA. There is a direct tax benefit for masses of salaried chaprasis that populate the lowest echelons of the government hierarchy and are notorious as the most lethargic in executing their duties.

The small and medium enterprises, that survive on thin margins, have perhaps been rightly awarded with some tax relief. High agriculture income earners continue to be a category no FM will ever dare to touch. At the same time Jaitley has sought to deepen the government’s self-created Robin Hood portrait of crusading against the rich, whether salaried or corporate majors, who will need to pay taxes between 30 to 35%, apart from the innumerable cess’s that have been added on over the years. Rahul Gandhi’s attacks on the government are mostly dismissed as inane and silly. However, name-calling the Modi government as suit boot ki sarkar seems to have pinched somewhere. In the guise of “equity” Jaitley has slapped an unreasonable 10% surcharge on those earning salaries between Rs 50 lakhs to Rs 1 crore. The extra money does not add much to the government kitty, but does severely penalise a small section of hard working corporate executives.

The salaried, as has been emphasised, are the most tax burdened as they have the least flexibility to play around with the money they earn, unlike, say, self-employed professionals such as doctors or lawyers. While it is noble that Jaitley wants our society to be equitable, the fact remains that in this country progress has for long been defined as the ability to escape the tyranny of abysmal government agencies and services. It is an aspiration that is shared by both the poor and rich.

This plays out within households in various ways as incomes increase, including the movement from government to private hospitals or schools, purchasing bikes and cars instead of using unreliable public transport, hiring touts to get the job done, whether it is to procure a driving license or registering a property or paying an expensive CA to handle the overzealous tax department. As the government fails to deliver in more and more areas, those that earn more pay even more for some of the basic amenities that are taken for granted in most civilised countries. The expenses include back up generators and inverters for power, expensive higher education for kids overseas and even holidays in Europe, America, south east Asia to escape the mess our cities have become.

A few decades back, left with no choice, thousands headed overseas to improve their lot in what was termed as brain drain. Modi & Jaitley’s zeal to cleanse the country of tax evaders maybe well meaning, but has conveniently overlooked that any government needs to deliver and be accountable as well. While there will always be the black sheep, holistic tax compliance cannot succeed unless it fulfils a selfish expectation that my hard earned money is being well utilised for personal and then larger benefit. Taxes, after all, involve a quid pro quo.

Indeed, good governance necessarily involves honest attempts to create an ecosystem where the poor and rich can be equal stakeholders in overlapping arenas of public goods, whether it is parks, hospitals or schools. This obviously is the tougher and difficult route to take. As things stand, unfortunately, the government delivery mechanisms do not inspire much, apart from the services of our dedicated armed forces that protect our borders and selflessly conduct rescue and rehabilitation operations when needed.

And, this has nothing to do with Modi & Jaitley.

Advertisements