CA Saurabh Goyal
Why we Indians don’t like to pay taxes voluntarily. The reasons can be many?
But some of the obvious reasons are-
1) Why should I pay? I am already earning very less.
2) When others are not paying….why should I?
3) What is the benefit of paying taxes? The corrupt politicians and bureaucrats will wipe it for their personal gains.
4) Tax rate ( Income tax) is too high. When i can survive in a profit margin of 5-8 percent, Why govt needs 30 percent of my profits to meet its social expenditure.
……so on….and so forth….
On the other side, whenever any natural calamity,religious or philanthropic requirement arises we all come forward and contribute wholeheartedly.
The basic difference between both the scenarios is-
On one side we don’t have any surety that whatever i have paid as taxes will be used for genuine purposes or not. Secondly, there is no direct relationship between my tax payment and benefits i get in return.
To address such a situation and to increase the income tax revenue of government multi-fold, following should be done-
1) There should be a column in the electronic Income Tax Return wherein the taxpayer would choose from the list of areas where he desires his tax money is to be used. For eg. Education, Agriculture, Science & technology, cleanliness, Roads, Railways etc.There can be multiple field selections with percentage allocations.
2) There should be another column in the electronic Income Tax Return wherein the taxpayer would choose from the list of districts , one or multiple districts where he desires his tax money is to be used.
3) The tax paid will be linked to a unique tracking number which will be combination of PAN/ Aadhaar number/ Financial Year.
4) The taxpayer can anytime through the incometax website, track with the help of tracking number, the usage of his tax funds.
5) The central govt should appoint an IAS officer in each district ( 707 new IAS posts to be created) who will be responsible for tracking of expenses as per the discretion of tax payer. Such Officer will earmark the tax funds received from public to the schemes of government and will be responsible for expenditure tracking.Such officer will directly report to PMO/ Finance Ministry.
I am giving this suggestion, but I am not too much optimistic about its implementation as it involves devolution of discretionary powers of central govt in utilising around 50℅ of tax receipts.As per budget estimates of 2017-18, approx 50℅ tax revenue of central govt will come from income tax out of total tax revenues of Rs 19 lakh crores. The govt will never wish to let go its powers in deciding the fate of income tax it receives.
Nevertheless,if this suggestion sees the light of the day later or sooner,there can be following advantages-
1) A feeling of attachment among the tax payers that their tax money is being utilised in their desired field with an option of tracking the same.This will motivate tax payers to voluntarily pay more and more taxes.
2) Less chances of corruption as the government machinery will always be under public scrutiny through online tracking of expenditure.
3) True spirit of democracy- Democracy is of the people,for the people and by the people.This system which is practically possible in this digital world will take care of democracy in true sense.
4) Government will also get first hand information about the wishes of people on real time basis.The direct tax( income tax) will in true sense be direct in such scenario.
5) There will be healthy competition among the residents of different districts to work hard and pay more taxes so that their district can be developed more and more. It will act as a catalyst in growth story of India.
6) If in case, any particular area of country still lag behind in development scenario, government will still have the discretion of spending indirect tax revenues in those areas.
7) In my view, this will create a growth linked scenario in the country. Hard working people will get more benefits and facilities in return.
(Author can be reached at firstname.lastname@example.org)