It has been more than two solid months now since our honourable Prime Minister announced the demonetisation of ₹500/1000 currencies. One of the major motives behind banning the largest denomination we had, as the PM himself stated, is to crack down on the ‘black money” menace.
I am not going to debate on whether the efforts are right or wrong, or talk about its consequences. Rather point out a missing element that could, in fact, act as a critical factor when it comes to the government’s efforts being successful and encourage the citizens to pay proper taxes in the long run.
Before we start, let’s break down the current scenario in India:
The country’s current tax to GDP ratio is around 16% (which is expected to be raised to 23% soon), with income tax rates being around 30%. I am not an expert on the subject, but these are the numbers I could gather from online sources.
So are these numbers very high compared to other countries? Definitely, not! But still, why aren’t people keen to pay their taxes in India?
The answer is simple!
“You won’t pay when you don’t see a return!”
So let’s ask a simple question, while we are comparing the numbers with other countries, Is the Indian government really providing services like the other countries that collect the same percentage of tax?
The processes in government offices, quality education and healthcare, basic amenities, infrastructure, etc., can we really be proud of any of what we have?
As a citizen of the country and a taxpayer, I would really like to see what use have my money been put to. Not more but just as much for what I (or people like me) pay.
We can console ourselves, that this is the first step towards a better India. But, wait! The steps we are taking are not complete!
You know that it is not complete when your people are ready to burn their cash rather paying taxes. You know the idea is not complete when there is a set of common people complaining about their inconveniences while the country is taking a step forward. These are majorly because they don’t understand the benefits behind it.
And most of all, you cannot ask rational individuals to keep on hoping while taking hard earned money from their pockets.
So as a citizen of the country, what will make me happy so that I pay my taxes?
“Taxes must give back to people through services.” – Nagabhairava Jaya Prakash Narayana,
Reduce the tax rate by perhaps another 10% or so, so there is greater compliance. In fact, greater compliance with lesser tax rate could mean more money from a highly populated country like ours, and not less.
Improve the quality of services and give the confidence to the taxpayers that it is well utilised. You don’t really have to show me the accounts; I will come to know when I walk on the streets.
Make us happy so that we pay the taxes. Later, after showing what you gave us, you can increase the taxes and people will be more than happy to pay.
The article is purely inspired by the video posted by “FDR India” (India’s leading think-tank and scientific research-resource centre, founded by Nagabhairava Jaya Prakash Narayana).