A septuagenarian retired private sector employee, getting a minimum EPFO pension of Rs. 1,000 per month, has saved money for over 50 years since he took up his first job, mostly in government schemes — such as postal small savings certificates, fixed deposits with public sector banks, subscription to government bonds, railway bonds, housing finance companies of PSU banks and LIC pension, for safety of his life-long tax-paid savings — is asked by the income-tax department to submit a ‘balance sheet’ of his deposits and income along with the annual tax return. This is despite the fact that all his income from savings earns the government the statutory 10 percent tax at source (TDS). They are linked with his PAN number. But, the income-tax department, tom-toming ‘saral’ or simple format of tax return system, is not impressed. As a result, private tax consultant has to be engaged at a cost to file such a return detailing fixed deposits and interest income derived from them. Taxmen could easily find them out in the net using his PAN access pin. They do that anyway to tally. However, they are simply inconsiderate despite his age and past tax records. They have all the time on earth to go after small tax payers while unaccounted ‘black money’ piles up in the hands of unscrupulous businessmen, wealth hungry politicians and their kin, government servants, hawala operators, etc.
It is altogether a different matter that the government, boasting highly publicised social and financial inclusion programmes, itself has almost no concern for the old and infirm who are made to submit ‘life certificates’ annually or periodically for any government or even pre-subscribed one-time deposit for LIC pension. The government is not concerned about how the country’s centi-million-plus old people — important part of the country’s democratic process — live and how they manage the growing expenses on housing, health and transport. No medical insurance covers their routine daily expenditure on medicines to fight diseases such as diabetes — often requiring two-to-three-times-a-day insulin injections in chronic cases — or on chronic kidney ailments requiring dialysis, blood pressure, heart, prostrate enlargement, arthritis, etc. The government offers no tax relief to the over-aged taxpayers, living mostly on pension and interest income from fixed deposits, on such medical expenses that could easily run into Rs.10,000-Rs.20,000 per month. Few will disagree that old age living is not easy in India. Yet, the old are made to pay the same rate of income tax as those service holders in government or private sector jobs, professionals like doctors, lawyers, practicing CAs, consultants, self-employed persons and businessmen. And, taxmen often threaten old people with notices while big time tax evaders, are treated rather diligently with kid gloves helping them hide more of their big income and assets as corruption runs deep into the system.
Thanks to some corrupt and incompetent taxmen, massive tax evasion by the rich and families of powerful politicians often go ‘unnoticed’ weakening the government’s budgeted revenue income in a big way and making the country a haven for tax-evaders. Those unscrupulous taxmen are behind the country’s ‘black money’-fed parallel economy. A recent IMF blog — a forum for the views of the International Monetary Fund (IMF) staff and officials on pressing economic and policy issues of the day — highlighted how deeply the costs of corruption runs. Taxpayers’ monies are lost in different ways, siphoned off from schools, roads, and hospitals to “fill the pockets of people up to no good.” Equally damaging is “the way it corrodes the government’s ability to help grow the economy in a way that benefits all citizens.” The IMF’s Fiscal Monitor analysis of over 180 countries, including India, showed how corrupt countries collect fewer taxes, as people pay bribes to avoid them, including through tax loopholes designed in exchange for kickbacks. Also, when taxpayers believe their governments are corrupt, they are more likely to evade paying taxes. It showed that the least corrupt governments collect much higher percentage of GDP in tax revenues than countries at the same level of economic development with high levels of corruption.
India’s long continued economic reforms hardly changed taxpayers’ perception of the government as insensitive towards genuine and willing taxpayers. Most citizens feel, often rightly, that taxmen, levy men, toll collectors, license providers, public contract issuers, government dole distributors, providers of such important citizenship-related certificates such as birth certificates, immigration certificates, ration cards, voter cards, Aadhaar cards, passports, etc., are all corruptible. Not many tax payers believe that the country is aggressively pursuing anti–money laundering activities and reducing transnational opportunities to hide corrupt money in opaque financial centres. Fighting corruption requires political will to create strong fiscal institutions that promote integrity and accountability throughout the state or state-aided sectors. The chances for success are greater when countries design reforms to tackle corruption from all angles. For example, reforms to tax administration will have a greater payoff if tax laws are simpler and they reduce officials’ scope for discretion.
Taxpayers should not be made to feel ‘sorry’ about being honest. They should not feel penalised or harassed by the government or taxmen for their honest income and wealth disclosure. It is high time that the government makes honest taxpayers feel that it cares for them. Until the government achieves genuine taxpayers’ confidence, its so-called fight against corruption would not be taken seriously by the public. A Forbes report recently pointed out that almost seven out of ten people in India had to pay bribe to access public services. This is despite the fact that corruption has been a major poll plank in India for decades. All political parties, fighting both parliamentary and assembly polls, promise to eradicate corruption. But, bribes continue to be the most efficient means to get work done in government offices. Honesty suffers. (IPA Service)
