[RajeVenu]

Originally Posted by sgiitk

There may be good reasons to think so:

1. Those paying the taxes are at or below the bottom of the queue of beneficiaries. If the taxpayer is to be given a decent share (say 30%) of the revenue in the form of services or facilities then he may be more inclined to pay up. When it comes to giving back all sorts of excuses, like poverty (maybe some justification), community, and caste are pulled out. Social justice can go this far and not all the way.

You are absolutely right but as you have quoted in one of your previous posts that had we spent even 10% of our talents in hiding money into productive work then things would have been different is true to the hilt. Media played a big role in misinforming the public and the failed govt aids/projects for the poor has finally landed in the pockets of select few. Govt has to take stock now and improve its amenities. My suggestion would be giving taxpayers their due and evaders strict punishments. Recently I read a news somewhere that china has barred its tax evaders from getting hotel rooms/air tickets etc etc. Till such time that an individual feels that his taxed income is being wasted by the govt and not being rolled back to him as better facilities there will always be another school of thought.

2. Widespread corruption and waste spoils the pitch.

3. I for one cannot understand as to why the big farmers are kept out of the tax net.

Even I am with you on that, promotion of agriculture can be done in other ways. Better still rather than being fully exempt there should be slabs.

[Sawyer]

Originally Posted by sgiitk

If the taxpayer is to be given a decent share (say 30%) of the revenue in the form of services or facilities then he may be more inclined to pay up.

I would be more inclined to pay my taxes even if I don't get a decent share but if some other less fortunate citizen - that is not a politician, a bureaucrat, or any of their cronies - gets a part of that in a manner that elevates their capability to not need this support in future. But because of the immense leakages in every governmental project/expense caused by either inefficiency, waste, or corruption, this isn't happening in India today; my share of benefits isn't going to the less fortunate, but is lining the pockets of the inefficient and the corrupt. Which is the reason I feel that in paying taxes I am being robbed.

The other reason I hate to pay taxes because it is so difficult to do so, where it comes to all indirect taxes.

Unless this situation changes, I will be always motivated to cheat on my taxes in every way that is available to me. Demonetisation, Digitisation, bring on any tool - I will find a way around these to not pay my taxes to the extent that my ingenuity lets me get away with this, and this is the root cause for the black money situation that no one is either able to, or has the courage to address.

Dishonest government and its dishonest bureaucrats preaching honesty to me is not acceptable, and I am not in a minority of people that think this way.

This is a story that is decades since independence in the making of it, and there has been nothing done about it by any government in power till now.

[arunphilip]

Originally Posted by sgiitk

3. I for one cannot understand as to why the big farmers are kept out of the tax net.

+1 to this. When we already have income-based slabs, I don't see the need for such a sop. Bring everyone under the tax umbrella, and rejig the slabs uniformly for all.

Originally Posted by Sawyer

I would be more inclined to pay my taxes even if I don't get a decent share but if some other less fortunate citizen gets a part of that in a manner that elevates their capability to not need this support in future.

Well said, and I totally echo that sentiment! OT, but recently I accompanied my dad to the ration office since the wanted to link ration cards with Aadhaar numbers. When I was there, I saw the various people coming to actually collect the allocated rations, and I felt extremely happy about the taxes I paid, seeing how it was being used to benefit fellow citizens. (Granted, I hate the hundreds of times I've heard of graft or misuse of funds, but occasions like this experience are very uplifting).

[binand]

Originally Posted by sgiitk

3. I for one cannot understand as to why the big farmers are kept out of the tax net.

One reason could be that, if we started taxing agricultural income it would lead to a rise in the prices of agricultural products, with catastrophic results in the economy. There is a sizable part of the population who barely earn enough for subsistence; this sort of price rise could be unbearable to these people.

There also would be calculations based on the price government pays for procuring agricultural produce; the increase in this might completely offset any tax revenue from agricultural income.

[joslicx]

Originally Posted by binand

One reason could be that, if we started taxing agricultural income it would lead to a rise in the prices of agricultural products, with catastrophic results in the economy. There is a sizable part of the population who barely earn enough for subsistence; this sort of price rise could be unbearable to these people.

There also would be calculations based on the price government pays for procuring agricultural produce; the increase in this might completely offset any tax revenue from agricultural income.

This is a very weak argument really against paying taxes. The income tax is tax on your income. If you are making, say, 50 lacs then you should pay tax on that. Why should taxing it lead to increase in prices? Its `not like one should have a God given right to tax free income. How or why should the farmer be treated any differently from any other citizen. Its just vote bank politics. No politician has guts to tax rich farmers (and most of the politicians themselves conveniently claim themselves to be farmers anyway)

[binand]

Originally Posted by joslicx

The income tax is tax on your income. If you are making, say, 50 lacs then you should pay tax on that. Why should taxing it lead to increase in prices?

This is really Economics 101. My copy of Samuelson is currently at my in-laws' place in Chennai; but from what I recall a tax results in the supply curve shifting to the left leading to an increase in price.

Also see:

https://www.boundless.com/economics/...put-190-12288/

Foodgrains are elastic in supply but inelastic in demand. Therefore the entire burden of any tax will be borne by the consumer.

[extreme_torque]

Simple question guys, what did we gain out of this exercise? The ATM's are dispensing fake notes. What has it come to?

[benbsb29]

Originally Posted by extreme_torque

Simple question guys, what did we gain out of this exercise? The ATM's are dispensing fake notes. What has it come to?

The post below sums up what actually happened. Ofcourse, some may choose not to see this, and continue to debate.

Originally Posted by civic-sense

I am flabbergasted that there are people who still are optimistic about this and/or refuse to see through. Let me pour some cold water. The whole process was a complete failure.

These are the net results:

- The country lost some money printing new notes.
- People went through some hardships. Some died and became statistics.
- Bank staff went through sleepless nights
- Some businesses like PayTM flourished.
- A lot of people started transacting without cash.

Its time we stop wasting time discussing this and get on with our lives.

[sgiitk]

Originally Posted by Sawyer

....... But because of the immense leakages in every governmental project/expense caused by either inefficiency, waste, or corruption, this isn't happening in India today; my share of benefits isn't going to the less fortunate, but is lining the pockets of the inefficient and the corrupt.

The other reason I hate to pay taxes because it is so difficult to do so, where it comes to all indirect taxes.

Unless this situation changes, I will be always motivated to cheat on my taxes in every way that is available to me. Demonetisation, Digitisation, bring on any tool - I will find a way around these to not pay my taxes to the extent that my ingenuity lets me get away with this, and this is the root cause for the black money situation that no one is either able to, or has the courage to address.

Dishonest government and its dishonest bureaucrats preaching honesty to me is not acceptable, and I am not in a minority of people that think this way.

I agree the enormous waste leads to an attitude of 'get lost'. I think you are mixing up 'tax avoidance' with 'tax evasion'. The former is done using legitimate means and is fair. It is the latter which is objectionable. I as a salaried individual only have access to the former.

Originally Posted by binand

One reason could be that, if we started taxing agricultural income it would lead to a rise in the prices of agricultural products, with catastrophic results in the economy. There is a sizable part of the population who barely earn enough for subsistence; this sort of price rise could be unbearable to these people.

I agree to an extent, and always feel that agricultural income should be taxed, but on a different scale. If I am an orchard owner getting a crore a year, why should I not be taxed. I will suggest higher exemption limits, and maybe (I will not be happy here) lower rates. Remember the income in the Agri sector can vary from the marginal or even sub-marginal farmer to the big landlord farmers.

One reason Agri income is not taxed is that many (in not most) of our netas are in the sector.

[Sawyer]

Originally Posted by sgiitk

I think you are mixing up 'tax avoidance' with 'tax evasion'. The former is done using legitimate means and is fair. It is the latter which is objectionable. I as a salaried individual only have access to the former.

I am simply saying why I believe that collecting taxes by a dishonest and/or inefficient government/bureaucracy to the extent that now exists in India feels like robbery, and will therefore be avoided by fair means or foul, weighing the risks involved in doing so. One would have to be a very rare exception to behave otherwise.

Your last sentence quoted raises an interesting question: is not paying the taxes due by businessmen/self employed people objectionable to you just because as a salaried individual you don't have access to tax evasion? It seems to me that this is the case with a large majority of Indians who "honestly" pay their taxes. There is nothing honest about paying taxes when tax is deducted at source, it is just helplessness. And even here, the practice of doing what ever is still possible by way of bogus rent receipts or leave travel bills or whatever little else that is permissible as a deduction before TDS is imposed, is not rare at all.

People keep pointing out to how small the direct tax base is in India and that many Indians aren't paying income tax even when due. I am merely pointing out that this isn't because as a people Indians are less honest genetically than people from countries that pay their taxes honestly - I think more highly of Indians than to tar them with that brush. No one in the world likes paying their taxes, but for Indians it feels more of an imposition because there is much more stealing away of the taxes that they pay. And this is visible stealing because corruption/inefficiency is visibly rampant.

It is a lot easier for a government/bureaucrats to declare war on its own citizens than to clean up their own act, is the conclusion one draws these days.

[avira_tk]

This thread was mostly driven by the common tendency to feel good about the misfortunes of others, mostly ones richer than the poster. That's how we are discussing agricultural income tax which has nothing to do with demonetization. This tax existed in Kerala and it was replaced specifically because it cost the government more than the collection to run the bureaucracy, it was replaced by the compound tax.

People who have no clue about agriculture should refrain from suggesting things that no government will implement. Developed countries sustain their agriculture through massive subsidies, here we have suicides and bankruptcies and arm chair policy providers here want to kill off whatever is left. Income tax on farming income if it is applied, should be like taxes applied to business, inputs and depreciation have to be factored in at current prices. A large farmer's income isn't like a salary, it has to cover input costs, advances, emergencies (both farmer's and workers') and preparation for the next year. It's not like a salary, pay your EMIs and you're free till the next payday. Unless you have a bumper crop on the upside of a commodity cycle, there's not much left over. Anyone familiar with agriculture will know how rare that is.

[Sawyer]

Originally Posted by avira_tk

This thread was mostly driven by the common tendency to feel good about the misfortunes of others

Lol. The Germans have a word for this tendency: schadenfreude.

IMO, it was largely driven by those helplessly paying their taxes via TDS, rubbing their hands in glee hoping to see that those that had the not common ability to be successful entrepreneurs in India, many of who had the further ability to reduce their tax liability honestly and dishonestly in ways denied to the salaryman, now get their due.

And it was also driven by those who underwent little real suffering as a result of the exercise.

[V.Narayan]

Originally Posted by avira_tk

This thread was mostly driven by the common tendency to feel good about the misfortunes of others, mostly ones richer than the poster. That's how we are discussing agricultural income tax which has nothing to do with demonetization.
People who have no clue about agriculture should refrain from suggesting things that no government will implement. Developed countries sustain their agriculture through massive subsidies, here we have suicides and bankruptcies and arm chair policy providers here want to kill off whatever is left. A large farmer's income isn't like a salary, it has to cover input costs, advances, emergencies (both farmer's and workers') and preparation for the next year. It's not like a salary, pay your EMIs and you're free till the next payday. Unless you have a bumper crop on the upside of a commodity cycle, there's not much left over. Anyone familiar with agriculture will know how rare that is.

Thank you very much for this post and for the knowledge of our world outside IT and young Upper Middle Class it reflects. Our tax collections are poor due to endemic tax evasion by those on whom it is leviable and not because agriculture isn't taxed. Agriculture and allied activities such as fisheries, logging, dairy make up 19% of our GDP and employ 49% of our labour. Services & Manufacturing make up 81% of GDP and 51% of labour. Those of us in urban occupation do not even begin to comprehend the risks and volatility of growing crops and getting them to market and then getting them sold. So what if there are a few rich farmers. First lets get the many rich business brethren (of which I am one) to pay their taxes.

[sgiitk]

Originally Posted by Sawyer

Your last sentence quoted raises an interesting question: is not paying the taxes due by businessmen/self employed people objectionable to you just because as a salaried individual you don't have access to tax evasion? It seems to me that this is the case with a large majority of Indians who "honestly" pay their taxes. There is nothing honest about paying taxes when tax is deducted at source, it is just helplessness. And even here, the practice of doing what ever is still possible by way of bogus rent receipts or leave travel bills or whatever little else that is permissible as a deduction before TDS is imposed, is not rare at all.stealing because corruption/inefficiency is visibly rampant.

Did I ever crib about the taxation. Today more and more professionals are also paying full taxes. My son is a consultant in a major chain of hospitals, and there is no cash component in his compensation. So do most of the top managers in the financial sector. Forget some family owned businesses. With peak taxation at only 30 odd percent I think not paying taxes is silly.

Why paying full taxes is personally profitable? You can invest the money as you see fit, and not just stuff it in a bag or trunk.

You are welcome to rant away, but times are changing.

[Sawyer]

Are they? Or is it just a case of the more things change, the more they remain the same. And if you think that anything but the smallest part of untaxed wealth was/is stored in a trunk, I have nothing to say.