Finance Minister’s taxes are too many and too harassing!
Taxes under him have become too many and too cumbersome!

Not good enough to make the tax regime simple and transparent. Make the tax regime less harassing!

P.Chidambaram, the Finance Minister, is now very much in the news and the TV screen because of the budget. The pre-budget and the post-budget season is the one for the FM to celebrate his newsworthiness. In the case of the present FM, he is a master of the art of public speaking and also the public posturing, given the non-speaking and non-audible PM who otherwise was held up as the architect of economic reforms.

Neither the PM nor the FM or any other individual can claim that crown that exclusively coveted by the unsung and unremembered poor Narasima Rao. Rao’s misfortune is that he left out  the Congress dynasty when he ruled the country and they, the dynasty and the coterie around it, had taken offence and they saw to it that Rao is not remembered and no mention is made of in the ritualistic recitation of the economic reforms eulogy!

As for the PM, he is now  nowhere in the scheme of things, when the next election is looming large  on the national scene.
The FM has to present a budget and any budget invites expectations about new taxes or duty cuts etc.

Now for the FM, the time is not suitable for his tune of the rate of economic growth as being the sole theme. Rate of growth in a skewed manner is all he knows and the election-eve mood in the country is not in a mind to give the benefit of doubt to the UPA government under Dr.Singh’s stewardship.

There are other issues that agitate the public mind.
Now as for the FM his budget might not evoke any enthusiasm  from the public for the FM has created a national paranoia about the several new taxes that are  proving to be great harassment to the average tax payer.

Also the news comes now that one of the  top advisers to the FM, Parthasarathy Shome, a tax expert with lots of IMF country experience, has chosen to leave the finance ministry on the eve of budget making. So many stories are making the rounds in the finance ministry. Now, the IAS men seem to have taken over the ministry and whether this is a good thing or not, only the next budget can tell.
There are now an estimated 35 million taxpayers. The potential number is about 50-55 million. The Internet has made the calculation and also paying the taxes through the net now a growing, streamlined system. About  140 million get their incomes from agriculture which is not taxed. These are figures given out by Mr.Shome himself from a recent interview.

Income tax rate at 30 % is not that lower in India. There are now some 100 services being taxed.

One serious gap is that at present even  services like agriculture consulting which is a very  low end activity is also severely handicapped by taxes! Certainly, there are services that are so taxed and one of the contributing reasons for the agriculture decaying! Mr.Shome says that agriculture is already taxed in termed of the valued added goods and services in agriculture. As for taxing the agriculture as such, Mr.Shome has no personal view. He simply says it is just a political decision. He seems to be knowing there is not much there to tax in such a heavily over-indebted farmers households!

Shome says that he has assisted the FM on tax reforms, he is the author of the much hated vat and fringe benefit taxes. Home says that under his advice now the Indian tax system is much reformed and tax administration has become more transparent and also “revenue productivity at a historic high”.

What all these things mean for the common man? For the average farmers? The villager? The poor? More harassment, more corruption at the income tax dept and more debts for farmers and more skewed development that squeezes the poor and fattens the rich! Is this not the popular impression? Isn’t the popular impression a cause for electoral defeats for the incumbent regime? The PM and the FM might not care for wining the elections! But the Congress party which anointed them at these powerful posts would pay a heavy price for anointing these two gentlemen! The price is not worth paying!

Chidambaram is known for having made so many promises like a dream budget and then the dream evaporated quickly and now also it is likely he might bring in new taxes as the ones ,like fringe benefit tax, value added tax etc, these new unheard of taxes it seems were all the brain child of  Shome who now had left the ministry.

Why the man left on the budget making eve? No one tells us. But there is reason to believe that the tax paying public are really felt harassed and are in a mood to vote against the UPA government for its unpopular measures.

There is now clear evidence that there is a widespread paranoia about the present finance minister and it is said that as long as the present minister lasts, such paranoia is bound to persist. The FM’s rules and regulations on his taxes have led to maximum harrassment, it is said. It is even said that his taxes have led less to  maximising revenues, more at harassing the taxpayers, specially the small firms.
The service  tax he introduced a decade ago brought also harassment to small firms. Tax consultants and auditors have suddenly become rich, thanks to the very nature of his taxes and given the sort of corruption at the grassroots in the Income tax depts., there is no way the tax payers can escape from paying a bribe at every turn when they visit the depts.! There are nexus between particular auditors and the particular income tax officers, their relationship crosses the boundaries of the states!

The FM’s secularity transaction tax is a transaction tax; and economics doesn’t support transaction taxes, except as a way of introducing friction in transactions. It also introduced complications from distinguishing traders from investors.
The fringe benefit tax is levied on a base that is impossible to define clearly. It involves masses of new records and long and vexing negotiations with the tax authorities.

We can go on and on in this way!
The Finance Minister has very little political experience. He comes from a community of traditional money lenders. So, he doesn’t have the broadminded view of the world or the sensitivities of the society at large. He has no empathy with the poor and the much harassed middle class professionals. He doesn’t travel, as a matter of routine(or principle?) beyond the metros, travels much abroad, very little inside the country. He is not a popular politician either within the party or with the general public. Of course, he is quite at home with the industry captains, the captains, given their mindset, seems to jell with the FM’s bravado talk of ,talking big in a country of vast mass of poverty and much expectation from the government.

Ours is neither a welfare state nor a caring state. It is a blatant state with an aggressive profit-seeking  and insensitive bureaucracy-driven a sort of oligarchy. Yes, it is the top heavy industry captains who call the shots when it comes to economic policy changes.

There is no visionary economic reforms where economic growth must be widely dispersed where the small and medium players also have a large contribution to the economy.

There is of course the islands of excellence in a vast sea of hopelessness and directionless. Rural poverty, agriculture decline and growing unemployment for both the educated and the uneducated is still a great reality of the vast geography.
Can the PM or the FM deny this reality?

Parthasarathy Shome is a man who left the first assignment at the Institute of  Fiscal Policy and Planning, the brainchild of  Raja Chelliah who, it seems, has harassed the man and he joined the FM and here too it seem he was an unwelcome man in a sea of IAS bureaucrats who are crowding the finance ministry.

Shome left on Jan 1,just two months before the budget and he is said to have brought some of the bad taxes from all across the world! And with the present mindset of an insensitive finance minister, they jointly have contributed to a new maze of anti-popular tax regime in the country!
An edit wrote: “fate and  the finance minister cannot be avoided”! They must be borne stoically!

So, what new taxes would come this time, the average tax payer is wondering. As for the tax dodgers, this may  be one more ritual, the presentation of the budget, we can at least ask the FM to root out corruption in his own dept and also see no scandals come out in the tax administration, the various appeals and the unending litigation the dept has thrown much innocent tax paying public.

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