Why Pay Tax?

Republic of India levies several taxes on Indians citing the reason that the money is required for the Public Spending and for the welfare of the society. But, we don’t see any kind of social/economic welfare of the individuals/society with these taxes, except that it helps a bunch of people supposed to be the people’s representatives in creating more wealth for themselves through several scams.

Many Indians do not like to pay taxes due to several reasons, some avoid tax and some try to reduce their tax burden in both legal and illegal ways… I am just trying to compile the reasons for reluctance to pay taxes. Most of them had valid reasons as well…

Let us first examine the different taxes that are levied on us in India:

Direct Taxes

This is a kind of tax as indicated in its name, directly paid to the Union Government. According to a recent report in Times of India, direct taxes account for 4.61% of India’s Gross Domestic Product (GDP).

As per the World Bank estimates, GDP of India is about US$4.457 trillion as per Purchasing Power Parity (PPP), however, nominal GDP is only about US$1.848 trillion. So now you can actually work out how much we pay as Direct Taxes.

As per the analysis of Union budget, India has witnessed a consistent rise in the collection of such taxes over last few years. Many economists note that growth in the collection of direct taxes reflects a healthy economic growth of India.

• Personal Income Tax:

Boss first of all I get the lowest salary compared to other regions, over and above I am made to pay this Income Tax, that too up to 30% of my annual income? Why should I pay? Did government got me this job? I studied in a private school/College, wherein my parents paid their hard earned money in the name of Donations, Capitation Fees, Annual School Fees, Building Construction Fee, tuition fees, library fee, etc. Government did not pay the salaries of my school/college teachers and govt. did not build my schools as well. As I am claimed to belong to an upper cast, govt., did not offer me any scholarship as well.

I got a Job only because of my hard work, my educational qualifications & my professional skills. Govt. did not help me in finding this job. Neither govt. pays my salary nor it gives me any kind of incentive for working there. So, please tell me why should I pay tax on my income?   

• Corporate Tax

I run a company which is into a legally allowed business activity. I established this company with my own money and also with the help of my family and friends. My company attempts to make the best possible product and it sells its products across the nation.

I faced several hurdles while setting up this business. I had to bribe government officials in each and every step to clear these hurdles, starting from incorporation of company, registering in labor department, registering for Shops and Establishment, obtaining business license, obtaining environmental clearances, etc. Nowhere the govt or its officials helped me in these activities. However, I had to bribe each and every department in the name of Fees under the Table (don’t know, whether these guys get salaries from the govt. or not)… I was somehow successful in clearing all these issues with the help of my consultant.

I had to take loan from a bank to cover up the capital shortage to acquire machinery and for working capital. Here also government did not help me. I had to run behind bankers for over 10 months to get the loan approved. The loan was sanctioned and disbursed after 10 months after giving 150% collateral for the loan amount. By this time, cost of machinery had gone up by 30% and the bank did not consider this escalation in the cost of project and I had to again approach my friends and family for the shortage. Somehow I established my business and started producing the planned products. Now government is asking me to pay tax for the products I manufactured and also on my net income!! With what face they are asking these taxes? Government is not offering me any free sops, it is not paying salaries of my employees, it is not selling electricity and water at nominal rates, it did not help me in setting up my business, it did not support me to run this business. Why should I pay them?

• Capital Gains Tax:

Yes, I have a property, which I bought some time back. Now I need money, so I sold this property. Government is asking me to pay tax claiming that I made a profit by selling my property!!! Does it make any sense? Did govt. help me in buying this property? NO. I bought this with my hard earned money. Why should I part with my earnings on my property with any one?

• Banking Cash Transaction Tax

Funniest of all… I have kept my money in a bank. Bank uses my money to run its business and it pays me a nominal interest for the money. The bank also charges me for the other services it provides. Now this govt. is asking me to pay a tax for transacting with the bank!! It is my money and I transact with bank, who the hell is government to ask for a cash transaction tax? Why should I pay it?

• Wealth Tax

Because of my hard work and also because of my ancestors, I have succeeded in creating wealth for myself and for my family in legal ways. It’s my money and I earned it. Why government is asking for a tax to be paid on my wealth?

• Professional Tax

I am a professional/ a salaried employee… Again my state government is asking me to pay a tax on my profession!! What sense it makes? Why should I pay it?    

To be continued.....