Why taxes don’t feel good

Bhartendu Sood

I have been an income tax payee ever since I started my service career in 1972. In the early years I never gave a thought why tax is deducted from my salary, until in 1985, when the then PM Rajiv Gandhi, during his visit to the drought-hit Kalahandi district in Odisha, made a startling revelation — of every rupee spent by the government, only 15 paise reaches the intended party. To this, my father reacted angrily: ‘This is the fate of the taxpayer’s money in our country!’ Both statements provoked thought. 

I was a senior executive then, dealing with banks and financial institutions and taking plethora of approval for installation of green-field projects from various government departments. This exposed me to the working of these institutions. What left me baffled was that the majority of senior officers in banks and government departments carried a ferocious sense of entitlement for undue gratification from customers, and if their palms were greased, they could go to any extent to bend rules. A top bank man once asked me if I could arrange for the honeymoon trip of his newly married son in Switzerland. 

It was also the time when the government had started assuming the new avatar of welfare state, with the objective to creating a vote bank for the ruling party. It opened new avenues of corruption as these subsidies reached only 20 per cent of the deserving. With the financial reforms of 1991, and opening up of economy, industrialisation and infrastructure development picked pace and gave birth to thousands of fly-by-night companies, wheeler-dealers and financial wizards. Any promoter could set up a project worth even Rs 200 crore without investing a single penny from his pocket, provided he was good in bribing and public relations. By now, politicians had also started demanding their share in the booty. After two-three years, 90 per cent of such promoters would not be traceable. Today, bulk of the NPAs and provisions for bad loans are the creation of that period which started in 1991, and is still continuing. The frequency has reduced, but not the magnitude. Audit by CA or CA certificate is something that has failed to serve its usefulness. Rather it makes delinquent officers act fearlessly as it acts as a shield to cover wrongdoings.  Had CAs been doing their work sincerely, frauds would have been much less. Unfortunately, most people in this profession work as agents or middlemen. 

Nothing explains better the fate of taxpayers’ money than this revelation that between 2013 and 2016, all banks lost Rs 66,000 crores to 17,504 frauds. One can’t say how many more skeletons lie undetected inside the cupboard.

Under such a scenario, please don’t ask me why I’m not happy to pay taxes in India. Nobody is against widening the taxpayer’s base, but equally important is to stop the abuse of taxpayer’s money which hurts genuine taxpayers. We need to make a fresh beginning.