[dextor]

Originally Posted by Acharya

I am actually quite relieved as a income tax payer to see high petrol/diesel prices.

I also favour this and actually its quite relieving. This pandemic would have brought all the burden to Income tax payers but having this distribution on indirect taxes helps in better distribution of burden.

I also agree on the point that most of the people are ready to pay taxes if its utilized for betterment of the society. But majority of the taxes are either gone in scams or to bail out some failed organizations or write off the bad loans.

I would have been a happy tax payer if I was to atleast get some sort of incentive for paying lakhs in taxes. May be some preference in government services, preference in railway/flight reservations, or some benefit in educational admissions for my kids. But finally what I get is same what a tax evader gets

And at any day I loose my job or get some illness/trouble, the government will not even pay back 1% of the money which I have paid as taxes.

[Living2Drive]

Here are some of my daily experiences about those who live uber life and pay no very little tax.

1) The Gas cylinder delivery guys in and around Chennai, one needs to tip him at least 20 to 50 INR per delivery on an average, the guy makes average of 1500 per day apart from his regular salary.

2) Auto driver around every corner, no one responds to Ola or Uber app during peak hours, say for example if you get down from train in Nungambakkam or in perunglathur, a quick 3 km ride will cost 50 INR and doubles if road is wet, these guys will to 15 to 20 trips in morning and another 20+ in the evening and make average 2500 per day.

3) beauticians who come home for saloon needs, there will be one or other marketing done and the bill would touch 1200 INR, they visit minimum 2 houses per day, even if i have to average its 2000 INR per day.

4) Called up urban clap to repair my wash machine, just to visit and report out problem the guy charged 600, plus 1200 to 1800 INR for labor depending on the repair. The top of all he will buy the parts, when i said i have bought the part already he denied to use it (must be having some profit on it as well).

5) vegetable seller around the corner, he booked the most expensive wedding hall in south Chennai for his daughter's wedding and there was nearly 400 gms of gold on the plate for the groom.

6) Prohit who visit for new moon, full moon and other rituals at home, though seasonal they make an average 80 to 120K a month.

7) the meat and fish seller, just over the weekend a guy makes an average 15 to 25K.

8) AC repair technician, charged 1200 for a regular maintenance, & they are high in demand during summers.

9) the municipality people who collect garbage from society, each apartment has to give an average 30 to 60K a year as gift. where will this get accounted, god knows.

10) Tyre shop guy, just in tubeless tyre repair, he will charge you any were from 150 to 300 depending on the vehicle and will make an average of 3000 to 8000 per day including wheel alignment and wheel balancing, I have not included the tyre sales here.

11) milk delivery guy in my apartment, he charges 50 Inr per half ltr packet per month, he does around 150 houses only in my society. This 50 does not include the cost of the milk packet, just his charges for delivery, he makes approximately 20000 only from my society delivery. he has 4 apartment under him in the same locality. Even during this pandemic this guy refused to accept payment anything other that cash.

There are many shop keepers who dont or under declare their income and escape taxes.

I have not added the bribers in every government offices here which is a very big whale by it self.

If all of these are brought to control. No matter who sits on the high chair, government will have enough money in the vault and cost of basics will come down and can be use for the reall needy.

How ever over the years i realized this is never going to happen and real jokers are going to be the salaried class & after taxes we are the real beggars, but for the world we are gold fish: shiny and glossy in white color jobs.

But in reality the above mentioned ones are the real big whales.

[gopi_rm]

Originally Posted by Stribog

Fact is, India had one of the highest corp tax rates in the world at 30%, rationalising it only incentivises companies to set up shop in India.

Indians are also one of the highest indirect tax payers. So do you agree that the indirect tax has to be reduced to the level of whatever country you are comparing India with?

Originally Posted by Stribog

There is a huge infrastructure creation drive underway, which requires money to fund it. The same infrastructure we BHPíans love to drive on and pose and take pictures on.

For that huge infrastructure building, I pay toll to use every inch of the National Highway and I also pay 15 years advance road tax to the state govt for infra being provided by the state.

You might be a part of small lucky group who does not have any impact due to historically high fuel price but the majority of the Indian population which belongs to lower middle and lower class are bearing the impact.

In any progressive economy, direct tax collection should be higher than indirect tax collection. I’m also reading reports that corporates are increasing their profit by reducing expenses on human resources. So I’m not sure how reducing corp tax will create more jobs.

[Stribog]

Originally Posted by gopi_rm

Indians are also one of the highest indirect tax payers. So do you agree that the indirect tax has to be reduced to the level of whatever country you are comparing India with?


For that huge infrastructure building, I pay toll to use every inch of the National Highway and I also pay 15 years advance road tax to the state govt for infra being provided by the state.

You might be a part of small lucky group who does not have any impact due to historically high fuel price but the majority of the Indian population which belongs to lower middle and lower class are bearing the impact.

In any progressive economy, direct tax collection should be higher than indirect tax collection. I’m also reading reports that corporates are increasing their profit by reducing expenses on human resources. So I’m not sure how reducing corp tax will create more jobs.

Please cite your claim that Indians are one of the highest indirect tax payers because that is nowhere near true.

Direct Tax to GDP is 6%, Indirect Tax to GDP is 5.4% (as of 2019)

Unless you are referring to the Direct Taxes to Indirect Taxes ratio, which has always been favouring Indirect taxes in India, though starting 1991, and been accelerated since 2010 is tilting slowly towards direct taxes.

But direct + indirect combined too we are far below the average Tax : GDP ratio of OECD countries.

Infrastructure includes (and this is not exhaustive)

Water connections - Jal Jeevan Mission alone has a budget of 50,000 Cr this year. Total expenditure over the next 4 years if Rs 2.9l cr.

Here are some fun facts on water or lack of it thereof,

1 - Waterborne diseases cost India an approx Rs 3,500 crores in treatments, borne MOSTLY by the poor and the poorest
2 - As of 2016 only 50% of India had access to some form of safe water, and less than 25% had access to safe PIPED water.
3 - 90% + of Indians with access to water used borewells - which am sure you will agree is not sustainable.

Source - Ministry of Water report in 2014. http://mospi.nic.in/sites/default/fi...56_14aug14.pdf


Solution ? Spend Rs 50, 60,000 crores / year to build reliable and safe piped water connections to ensure that at least 95% of India gets access to water.

Do you want to deny water to the poorest sir? Because the revenue collection you begrudge goes partly to build this.

Then you have boring things like ports, waterways, sewerage connectivity.

On Sewerage connectivity, which will be taken up post Jal Jeevan Scheme, the estimated costs of providing STP's for our 7,500 towns alone would need Rs 7,50,000 crores in investment. Planned at around Rs 1,00,000 cr / year.

Sir do you think India does not need STP's? We can continue dumping raw sewage into our rivers, streams, seas and bury them in the ground?

All this and more, power, urban mass transit (just the metro's under construction come in at Rs 3L cr total and counting),

All this is not covered by Tolls sir. It comes from governmental revenues, and a large part of it is the excise mop up.

Can you cite these reliable claims that "corporates are reducing jobs"? would love to read the papers that make specific claims as opposed to scattered reports of certain companies doing some reductions.

As to reality,

https://www.contract-jobs.com/news_d...heme-extension

https://www.thehindu.com/brandhub/pl...le34368237.ece

https://www.businesstoday.in/latest/...827-2021-04-07

https://pib.gov.in/PressReleasePage.aspx?PRID=1710134

https://www.business-standard.com/ar...1701382_1.html

Are you arguing sir that manufacturing jobs do not create jobs? Or that we should not be creating more manufacturing jobs?

Or alternatively could you cite a few success stories of developing countries with record high corporate taxes that managed to become even a middle income economy?

And let me assure you, with fuel bills exceeding Rs 20,000 a month I am most definitely affected every time I fuel up. And I am too a salaried person who pays through my nose.

But I also realise I owe a duty to poorer Indians, who need access to things like water, clean soil (STP), access to reliable mass transit, electricity 24/7 etc. In my mind my personal pains outweigh the tangible outcomes.

Now unless some expert can figure out a way to conjure up money from thin air, the govt needs to find ways to fund its infra schemes and one way is excise mop up from fuel.

And I agree with you, the ratio of direct to indirect taxes should be 65:35 favouring direct taxes. But India since 1947 has had a massively skewed ratio.

Something being slowly bridged only now.

An interesting read on this, and the graph from 1961 with this ratio should be an eye opener.

https://www.livemint.com/Opinion/brb...ax-policy.html

[gopi_rm]

Originally Posted by Stribog

Do you want to deny water to the poorest sir? Because the revenue collection you begrudge goes partly to build this.

Sir do you think India does not need STP's? We can continue dumping raw sewage into our rivers, streams, seas and bury them in the ground?

All this is not covered by Tolls sir. It comes from governmental revenues, and a large part of it is the excise mop up.

Dear Sir,
With due respect, I never said poor should be denied of clean water and proper sewage connectivity. I also want improvement of living standards of all the people and I agree that for lower class, these basic services cannot be billed per month/annum basis rather has to be funded by the Government.

However there is a limit on collecting indirect taxes which again affects the lower class indirectly more than the upper class. And every time fuel price rises, govt is lying to the public saying price rise is because of increase in crude oil price.

This is my basic understanding: Higer indirect taxes --> rise of inflation --> reduction in public spending power--> fall in sales --> fall in production --> no increment/reduction in investments

I am not against corp tax cut. But I am againt extracting as much as possible from lower class via indirect taxes and at the same time giving tax cut for high profit making corporates.

The infra development (water, sewage, metro, etc.) and corp investments have been continuously increasing year by year even when indirect tax collection is lesser than today and corp tax was higher than today. One has to compare the govt's spending on infra before and after increase in indirect tax collection to susbtantiate the claim that the additional indirect tax collected is allocated/spent for x,y,z schemes.

Compared to corp tax concession, the factors which contribute more in increasing investments are streamlining approval process, reducing red tape, brining more transparency, stable longterm policy decisions, proper GST implementation (please check with SMSEs regarding complicated GST filing process and it's impact) etc. I do not see any improvement in these areas compared to the previous regime. I personally knew few people (who are strong supporters of the current regime) running SMSE's are planning to move their operations outside India because of GST complications, no support from Govt during pandemic, issues in dealing with IT dept even after filing taxes with due diligence.

Originally Posted by Stribog

Can you cite these reliable claims that "corporates are reducing jobs"? would love to read the papers that make specific claims as opposed to scattered reports of certain companies doing some reductions.

Businesstoday: Reality check: Corporate tax cut unlikely to increase investment or employment

Reuters: Modi's big tax cut unlikely to spur job bonanza in India

Originally Posted by Stribog

Now unless some expert can figure out a way to conjure up money from thin air, the govt needs to find ways to fund its infra schemes and one way is excise mop up from fuel.

Previous regimes as well as progressive economies around the globe neither conjure up money from thin air nor collect unreasonable indirect taxes for building infra. Proper financial planning and revene generation is the way to do it. Depending on indirect taxes for govt. spending shows the financial mismanagement.

Originally Posted by Stribog

And I agree with you, the ratio of direct to indirect taxes should be 65:35 favouring direct taxes. But India since 1947 has had a massively skewed ratio.

Something being slowly bridged only now.

The ratio of direct to indirect taxes (33:67 % apprx.) remains same since 2014 (as per data from previous posts) and there is no bridging. Both values are approximately doubled now compared to 2014.

End of rant...

[vishnurp99]

Originally Posted by gopi_rm

The ratio of direct to indirect taxes (33:67 % apprx.) remains same since 2014 (as per data from previous posts) and there is no bridging. Both values are approximately doubled now compared to 2014.

@Gopi_rm - Are you sure about this information? How is it that both direct and indirect taxes have doubled from 2014 but the GDP has not been growing all that much?

If it's accurate, then the indirect taxes may have increased due to GST and direct taxes due to the shift towards digital payments.

It can only mean that the tax to GDP ratio has increased which seems to be a good thing to me. What am I missing here?

[maddy42]

Originally Posted by anb

Over 46% population in this country are below 25. How they are supposed to pay income tax ?

Originally Posted by anb

Around 47 % population are below 25 years.Only 30-40 % women are employed in India.

I see that the %age above 25 years has increased by 1%age point between two posts

You are missing the point being discussed which is about double taxation of the employee while you have evaders showing no income to not pay any taxes.

Maddy

[anb]

Originally Posted by maddy42

You are missing the point being discussed which is about double taxation of the employee while you have evaders showing no income to not pay any taxes.

Maddy

We pay Rs.18 as road infrastructure cess for every litre of petrol and diesel. Then again we pay toll when we travel through same roads. What about this double payment ? Massive cess on fuel in the name road infrastructure and again toll for the same infrastructure.

The topic is income from excise duty which includes this Rs.18 infrastructure cess. The discussion is deviated from these kinds of double taxation.

The 1% change is a typo. Anyways the figure is not steady, it’s dynamic. It may be increasing every second as population is increasing.

[Stribog]

Originally Posted by gopi_rm

Dear Sir,
However there is a limit on collecting indirect taxes which again affects the lower class indirectly more than the upper class. And every time fuel price rises, govt is lying to the public saying price rise is because of increase in crude oil price.

This is my basic understanding: Higer indirect taxes --> rise of inflation --> reduction in public spending power--> fall in sales --> fall in production --> no increment/reduction in investments

I am not against corp tax cut. But I am againt extracting as much as possible from lower class via indirect taxes and at the same time giving tax cut for high profit making corporates.

The infra development (water, sewage, metro, etc.) and corp investments have been continuously increasing year by year even when indirect tax collection is lesser than today and corp tax was higher than today. One has to compare the govt's spending on infra before and after increase in indirect tax collection to susbtantiate the claim that the additional indirect tax collected is allocated/spent for x,y,z schemes.

Compared to corp tax concession, the factors which contribute more in increasing investments are streamlining approval process, reducing red tape, brining more transparency, stable longterm policy decisions, proper GST implementation (please check with SMSEs regarding complicated GST filing process and it's impact) etc. I do not see any improvement in these areas compared to the previous regime. I personally knew few people (who are strong supporters of the current regime) running SMSE's are planning to move their operations outside India because of GST complications, no support from Govt during pandemic, issues in dealing with IT dept even after filing taxes with due diligence.



Businesstoday: Reality check: Corporate tax cut unlikely to increase investment or employment

Reuters: Modi's big tax cut unlikely to spur job bonanza in India


Previous regimes as well as progressive economies around the globe neither conjure up money from thin air nor collect unreasonable indirect taxes for building infra. Proper financial planning and revene generation is the way to do it. Depending on indirect taxes for govt. spending shows the financial mismanagement.


The ratio of direct to indirect taxes (33:67 % apprx.) remains same since 2014 (as per data from previous posts) and there is no bridging. Both values are approximately doubled now compared to 2014.

End of rant...

On the topic of Fuel and it hurting the common man.

Here is the Indian CPI Basket,

https://www.numberbasket.com/india/e...-weights-table

Food forms 50% + of the rural basket, and food is deeply subsidized ​via the PDS.

Fuel + Light combined form 8% of the rural basket and 5% of the urban basket.

The last Census came up with very interesting findings on how India commutes. There would be some minor changes here but not overly so.

https://www.thehindu.com/data/india-...cle7874521.ece

Only 12% of India uses bikes / scooters etc and less than 2.5% cars.

A whopping 67% walk, don't travel to work daily or cycle (more cycle than bike users fyi) and another 12% use public transport WHICH too is subsidised.

So from no angle does this fuel price rise impact the poor or lower middle classes.

Inflation (for the majority of Indians) has also been pretty much in check.

https://tradingeconomics.com/india/inflation-cpi

The only set these fuel price rises impact inordinately would be the car owning Upper income classes. And yes, if you own a car, you by default fall into the upper income grouping. That is how poor India is.

So please can you provide some data to back your claims up tht the poor are being impacted? Because on the ground fuel price rises don't feed back into them, either because govt's eat the losses by providing subsidies (food, transport) or they simply don't have a motorised vehicle to begin with.

The same "high profit making"corporates generate jobs AND also incidentally provide 25% of governmental revenues via corp taxes - this is in addition to GST which comes from economic activity which forms another 30%, so fully 55% of our taxes come FROM economic activity that corporates generate.

Capex by the Central govt is at an all time high, so your claim that it was the same or even rising before is also false.

Capex to GDP ratio was around 1.6 (reaching a small peak in 2010-11) from the period 2009-14.

it is currently at 2.6% with a higher GDP, resulting in much higher Capex outlays. This is a very large increase, funded in part by the excise mop up we are discussing.

With regards to other aspects, they too are happening, look up the jumps in ranking on Ease of Doing Business for instance. GST as bad as it is was INSANELY worse in its pre GST avatar and you can ask these very same friends of yours how bad it was to do intra state business when you had a dozen different tax codes, octrois, etc etc.

But on the topic of corp taxes, despite the reduction the corp tax uptake is hitting new highs as I already cited.

Your links on why these won't raise job creation were theoritical, when we have record FDI flowing in since 2019, AND actual job creation rising, esp in states like UP which previously had very limited manufacturing capabilities.

The record high FDI tells me that globally at least investors seem to be very happy putting money into India. Also in tune with this is the new records in merchandising exports India has been setting. Below is for 2020, 2019 both years saw India highs for FDI.

https://www.business-standard.com/ar...2400880_1.html

Could you tell me which "progressive" state made it to advanced economy status without the benefit of colonisation (to extract and transfer wealth), no mineral wealth and was a democracy with 87% poverty levels in 1947.

The only comparable economy is China (though it is not a democracy but still),

It has a lopsided tax set up too, with the bulk of its taxes being indirect 55% vs 29% coming from direct taxes (income taxes).

If you are comparing economies like the US, UK, Germany etc with India, then that is comparing an Ambassador to a Porsche, not even in the same planet.

[ashokrajagopal]

Originally Posted by Stribog

Here is the Indian CPI Basket,


The last Census came up with very interesting findings on how India commutes. There would be some minor changes here but not overly so.

Inflation (for the majority of Indians) has also been pretty much in check.

https://tradingeconomics.com/india/inflation-cpi


The same "high profit making"corporates generate jobs AND also incidentally provide 25% of governmental revenues via corp taxes - this is in addition to
Capex to GDP ratio was around 1.6 (reaching a small peak in 2010-11) from the period 2009-14.

it is currently at 2.6% with a higher GDP, resulting in much higher Capex outlays. This is a very large increase, funded in part by the excise mop up we are discussing.

With regards to other aspects, they too are happening, look up the jumps in ranking on Ease of Doing Business for instance. GST as bad as it is was INSANELY worse in its pre GST avatar and you can ask these very same friends of yours how bad it was to do intra state business when you had a dozen different tax codes, octrois, etc etc.

But on the topic of corp taxes, despite the reduction the corp tax uptake is hitting new highs as I already cited.

I am not really sure I disagree with you, but I do have to point out some problems in your arguments.

a) You are saying Inflation is low, because WPI and CPI is low. But WPI and CPI are both created based on estimates, and governments around the world are notorious to not correctly estimate these. For India WPI was about 9 or so and CPI about 4 or so. These do not have to be equal but glaring gaps are not really pointing to correct estimation. Inflation data is not high frequency data.
Saying inflation is low when actual prices are higher because government is choosing to calculate it like that is kind of circular logic. Fuel is costlier, LPG is costlier, and vegetables are costlier at retail level.

b) Not just car owners, or even bike owners, local rural transport is substantially private jugaad setups and fuel price rise affects a lot of people. It is not something that only affects car owners. Some stuff is subsidised when it comes to food etc, but some are not. For example there is zero subsidy on cooking gas now, after the much touted schemes.

c) It seems like you go into the Stock-to-flow comparison and back. If you compare everything to GDP, please stick to that.
If you are doing actual numbers, please stick to that.
There is really no point in stopping counting at 2019, because the corporate tax cut was in 2019.

For instance, Corporate tax projected for 2021-2022 as per the Budget is 5.47L Crore.
This is smaller than 5.71 L crore, which is the actual amount collected in 2017. Thats Corporate tax revenue from 4 years ago.

This is reduced revenue(absolute numbers), reduced revenue percentage, reduced percentage of revenue to GDP ratio.
It seems to me that you imply the opposite of that, which is not true.

d) When it comes to Jobs etc, we have to discuss actual jobs. Not the crores of investment. Crores of investment include stuff from real estate cost to company vehicles and do not matter directly.
The way to measure jobs is to actually measure jobs. How many new jobs. What is different from the trend.
I am not sure you explain these.

e) GST is tax paid by buyer. Corporates do not provide GST. Government decides to tax consumer and consumers pay. Government decides not to tax consumer, then consumers wont pay. Attributing GST to corporates who are buyers is not correct.

[gopi_rm]

Originally Posted by vishnurp99

@Gopi_rm - Are you sure about this information? How is it that both direct and indirect taxes have doubled from 2014 but the GDP has not been growing all that much?

I took the data from the below comment in this thread.

Originally Posted by ashokrajagopal

Attachment 2181871
So, this is a tad dated, ie. from the time 2021 budget came out in February, but basically conveys the point. For latest numbers, pls check CBDT websites.

[Kumaran93R]

Just my thoughts on this:

We are paying one of the highest taxes on fuel in the world.

For all those who say that fuel price increase affect only the bike and car owners, this can't be further from the truth. Fuel costs go into everything, because of transportation. Fuel price hikes affect the cost of food items immediately.

And do keep in mind that the rise in food prices affect the poor disproportionately more than the middle class. Food is the single most non negotiable cost for anyone. And as a portion of total income, the poor spend a huge percentage of their income in food.

Once you go to rural India and talk with a farmer, you'll understand that the cost of transportation of the food grown is a huge portion and is more than most of the actual farming costs.

We're back at the start of a huge inflationary period. Unless the govt acts now, we'll again see rapid inflation. And raising interest rates now to curb inflation in this cash-flow starved economy is akin to suicide.

The government has to reduce fuel prices now to stop hyper inflation before it spirals out of control. Again, we are paying one of the highest fuels tax rates in the world.

[Geta]

Originally Posted by gopi_rm

Dear Sir,

The ratio of direct to indirect taxes (33:67 % apprx.) remains same since 2014 (as per data from previous posts) and there is no bridging. Both values are approximately doubled now compared to 2014.

End of rant...

The last time I checked, direct taxes (personal income tax+ corporate tax) collection and the indirect tax collection was almost the same (50:50 ratio)

The same 1% of the citizen who shell out the entire 100% of the direct taxes, pay a very major portion of indirect taxes too, in the form of property registration charges, vehicle registration charges, GST on vehicles etc. These 1% of the citizens get nothing in return from the government in the form of social security, free healthcare, free education etc. If these people pay taxes for say 15 years and then lose a limb or lose a job, the government will not pay a penny back to them. These 1% are also highly qualified and their skill sets are valued around the world. Try squeeing out more money from them and they will relocate to greener pastures abroad.

1) Charity should not be forced
2) You can't rob Peter to pay Paul.
3) People should not be allowed to live off subsidies from birth till death.

[Carmine_pepper]

Loved the high quality of debate here. It all boils down to if the govt can pull off a decent rebound with the money collected from this tax or not. If the money keeps sinking into pockets of politicians and babus or their cohorts the population will keep on getting more frustrated with system leading to even more tax evasions and no noncompliance. there is nothing more dangerous to a country than a delusion-ed population without any hope for betterment.

PS: Not applicable to the this forum members as everyone here knows their machines a lot better but how many people complaining about high fuel prices are extracting maximum fuel efficiency from their bikes/cars?? If they were ,we would be witnessing a sea change in on road behavior of our motorists on road .

[Geta]

Originally Posted by Geta

The last time I checked, direct taxes (personal income tax+ corporate tax) collection and the indirect tax collection was almost the same (50:50 ratio)

The same 1% of the citizen who shell out the entire 100% of the direct taxes, pay a very major portion of indirect taxes too, in the form of property registration charges, vehicle registration charges, GST on vehicles etc. These 1% of the citizens get nothing in return from the government in the form of social security, free healthcare, free education etc. If these people pay taxes for say 15 years and then lose a limb or lose a job, the government will not pay a penny back to them. These 1% are also highly qualified and their skill sets are valued around the world. Try squeeing out more money from them and they will relocate to greener pastures abroad.

1) Charity should not be forced
2) You can't rob Peter to pay Paul.
3) People should not be allowed to live off subsidies from birth till death.

4) People who criticise reduction of corporate taxes to global standards have no right to defend Zero taxes on farm income. Corporates are not devils and farmers are not angels.
5) You can not make the poor rich by making the rich poor.