Groping in dark

The 15-year income tax data released last week confirms a known fact that a small number of Indians pay income tax. In a country of 125 crore only five crore file income tax returns and of them 1.6 crore pay no tax. Since a small base does not yield much direct tax revenue, the government taxes goods and services more. This is considered regressive since indirect taxes do not discriminate between high-income and low-income sections. The poor end up paying a greater part of their income in Central and state taxes. That tax evasion is rampant is common knowledge. Much of it is officially sanctioned. Technology is available to track individual and corporate tax evaders. It is hard to conceal income without official connivance. But neither ruling politicians nor bureaucrats are keen on nabbing tax offenders. Corporate funding of political parties comes in the way and even influences decision-making on tax rates and tax breaks. Import duties are raised or lowered arbitrarily to protect or punish domestic companies. Like the CBI, the ED (Enforcement Directorate) has become the latest useful political tool. The recent hullaballoo over black money abroad diverted attention from domestic tax evasion.

Playing mai-baap, governments give themselves a needlessly greater role than is good for the citizen or the country. Huge taxes are collected but spending on essentials like education, health, infrastructure and social security is no longer a priority. The once considered essential State responsibility is being delegated to the private sector. Misspending of the tax money is common at the Central and state levels. Finance Minister Jaitley’s talk of “tax terrorism” raised hopes for reform and relief. Two years down the line, he has neither simplified nor lowered taxes. The GST has got stuck in the political gridlock. The Modi government remains undecided — whether to follow the capitalist or socialist path, Amartya Sen or Jagdish Bhagwati.