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Shame! Jaitley's right, we want development without paying taxes

  • In India, the percentage of tax payers is ridiculously low. 
  • However, all around us are signs that wealth is available in the country. 
  • When Indians won't pay their tax, how can this nation develop? 
     
If no one pays taxes how will we develop

 

The standard refrain in India, when the issue of paying our taxes comes about, is the age-old complaint - "There are no roads or drains, why am I paying anything?". While this is undoubtedly a fair criticism of the abysmal infrastructure situation in the country, this is also an unnecessarily circular argument. 


Everything costs money. And while we like to point to the shiny new cars and large homes of politicians, we quickly forget that those are either the result of corruption or earned privately through contracts, which are also sometimes gained via corruption. The reality is that every centimetre of road or drain and every foot of power or telephone cable costs crores of rupees, money very often the government simply does not have. 


Consider the numbers - 


An estimated 4.2 crore individuals work in the organised sector - i.e they earn a salary. The number who file returns for that salary are just 1.74 crore. 5.6 crore are estimated to work in the unorganised sector - business persons, artisans, professionals like lawyers, doctors, etc. Only 1.81 crore of those filed their income tax returns. 


So of this 3.7 crore who submitted their earnings, 99 lakh show incomes below the taxable income of Rs 2.5 lakh per year. Interestingly, 76 lakh say they have an income above Rs 5 lakh per year. Only 1.72 lakh individuals admit their income is more than Rs 50 lakh per year. 


Post demonetisation however, wealth began to mysterious pour out of the rafters across India. 1.09 crore deposits made an average deposit of Rs 5 lakh. 1.48 lakh deposits had an average of Rs 3.31 crore. 


The situation is not much better on the business side either. We seem to be a nation on the verge of economic collapse if we go by the numbers. 13.94 lakh companies registered in India upto 31st March 2014. Of that great number, only 5.97 lakh companies filed their returns. And within that, only 28,667 companies have shown profit between Rs 1 crore to Rs 10 crore. 


2.76 lakh companies have shown losses or zero income. Apparently vast swathes of this nation are dead broke and making no sales at all. As the Finance Minister pointed out in his budget speech - 

 

"We can contrast this with the fact that in the last five years, more than 1.25 crore cars have been sold, and a number of Indian citizens who flew abroad, either for business or tourism, is 2 crore in the year 2015. From all these figures we can conclude that we are largely a tax non-compliant society. The predominance of cash in the economy makes it possible for the people to evade their taxes. When too many people evade taxes, the burden of their share falls on those who are honest and compliant," 

 

The situation isn't quite the same in those fancy Western countries Indians like to emigrate to and marvel over. The tax rates there, in Sweden for example, as an eye watering 60% in most cases. Even in America, the average tax burden is close to 40%. And a half, if not more, of the eligible taxpayers, pay their tax. 

 

Yes, they have excellent roads and bridges. But their governments also have the money for building those amenities. 

 

If we ever wish to develop, to have the roads we think we deserve and that uninterrupted 24/7 power we all crave so much, then perhaps it is time for us, the citizens of India, to admit that we all have a part to play, and pay our taxes. 

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