A report by news agencies claims a group of senior Indian Revenue Officers (IRS) has suggested certain remedies and quick cures to the Union government to effectively face the fiscal difficulties that will arise in the fight against the coronavirus pandemic in India. Most probably staying at their respective homes and keying in their wish list, these officers do not seem to have applied their minds to create new revenue sources for the government. In the age old Indian tax mindset, these officers have, in their paper of 23 April 2020 named FORCE (Fiscal Options & Response to the COVID-19 Epidemic) suggested a further super rich tax and a higher levy on foreign companies.
In this paper submitted by the IRS Association to the CBDT (Central Board of Direct Taxes) Chairman PC Mody, the officers have said that tax relief should be restricted to honest and compliant taxpayers, especially those filing Returns on time. Now this brings in a lot of discretionary powers to these same very officers. Who but they will separate the grain from the chaff. They will decide who is honest and who is not. Figuring out tax compliance solely on the basis of timely filing of Returns may not be the most effective way. Going ahead, these officers have also brought in, most likely, personal experience into play.
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Adding that apart from filing Returns on time, there have been many instances of non-filing of Returns increase in non-deductions and withholding of TDS apart from so called rising under reporting of tax liabilities through bogus loss claims. This too is a matter of grave concern. No one can deny that human beings, no matter which nationality, always hesitate to pay taxes. Everyone feels that when their hard earned money is snatched away, it is a regular punishment that is meted out to them for no crime ever committed by them. Keeping this thought in the backdrop, we have to consider India’s case as being unique in many ways. While the government of this country has been very dependent on tax revenues, it has miserably failed to innovate newer tax systems where people will be willing to pay up in exchange for benefits.
Since the government simply takes away from those it has included in the direct tax net, it does not consider replenishing the loss in any manner. Put simply, the direct tax payer feels there is no safety net for her if she loses the ability to earn for whatever reasons. Similar to police officers using filthy language and third degree measures because they claim they invariably encounter criminal elements of society, these tax officers also view revenue increasing models through the prism of tax evaders. From this lopsided vision comes the run of the mill idea to tax further the super rich by increasing their slab from the present 30% to 40%. There is no thinking demonstrated in this as to how to increase the tax net.
That apart, the unique situation of India may not be forgotten. The November 2016 Demonetization was a great setback for entrepreneurs since the economy of this country had been cash-dependent since ages. The economy was given a mortal jolt for fleeting political goals at that time. India was injured and the damages are just showing up. In between came the Goods and Services Tax. Implemented without proper preparedness and thinking, GST had still to go a long way in its operational smoothness when this present pandemic has engulfed not only the nation’s attention but its economy and energy to withstand battering. Coupled with this is the dismemberment of the workforce taking place now. That aspect will spin a very different tale on the industrial, commercial and trading activities of India in the near future. Next is the destruction of the market whereby there will be no buyers to purchase goods if they do get produced. In brief, those who were rich few months ago may not be able to make ends meet in the near future.
The pity for India is that the governance system has never recognized or taken assistance from different walks of society. Therefore, bureaucrats are the only fall back for our government. It has never trusted so now, in a real threat situation, it is incapable to rely on people outside government but who have excelled in economics, health, particularly in matters concerning psychology and other subjects.
In its desperation to increase revenues, the government, hopefully, does not accept such recommendations that are born out of the brains of people who think they do but in reality know nothing of the plight of the common citizens now in these changed circumstances.
