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LATEST NEWS UPDATES | Don't Tell Kanhaiya What To Do Because You Think JNU Runs On Your Taxes -Sruthijith KK

Don't Tell Kanhaiya What To Do Because You Think JNU Runs On Your Taxes -Sruthijith KK

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published Published on Mar 6, 2016   modified Modified on Mar 6, 2016
-Huffington Post

Of all the arguments that have been raised this turbulent spring in our country, one stands out as egregiously vulgar. It evokes in me the moral equivalent of the middle-ear reflex to high intensity sounds, which has a special place in the hierarchy of unpleasant sensations.

It's the tax nationalism argument. In essence, it's this: How dare students benefitting from subsidized education funded by OUR tax money hold opinions that run counter to ours. To mask the real hideousness of this question, clumsy caveats are added. We are talking about politicking and not politics (what is the difference?), student politics is fine but not anti-national slogans, and so on.

At the heart of this line of argument is the great Indian upper middle class angst that we pay the taxes and hence are entitled to greater share of hand-wringing over how our tax money is spent. It betrays a longing lurking just beneath the surface--for a world where votes weren't tax-agnostic, a country that is more like a corporation, where your share in equity capital determines your share of control.

Padmashri T. Mohandas Pai is a vocal proponent of this argument, but he is by no means alone in this thinking. That reliable indicator of popular sentiment among People Like Us--the memes that go viral on Facebook and Whatsapp--have for a while been harping over the shocking non-fact that only 3.2% of Indians pay taxes. The rest, like the worthless PhD scholars of JNU, pay no taxes, live off our taxes and have the temerity to oppose us in television debates.

It's an absurd argument that deserves a swift burial.

It's true that only 3.2% (or thereabouts) of India's population pays personal income tax. This is mostly because only that many people have incomes high enough to be taxed (Rs250,000, or $3,700 per annum).

But does this mean only 3.2% of Indians contribute to taxes? No!

Let us turn to the budget that has just been delivered. It estimates that in the 2016-17 financial year, government will receive Rs16 lakh crore in gross tax revenue. Of this, how much is the contribution of personal income tax? Rs3.5 lakh crore, or 21%.

Where does the rest of it come from?

Income tax and corporation tax (the latter is about Rs5 lakh crore or 31% of the total receipts) constitute that part of the tax kitty known as direct taxes. Then there are indirect taxes, which are customs, excise and service tax (together Rs7.7 lakh crore or 48%). These are taxes paid by every citizen, including the poor, when they consume anything--a pack of salt or soap or a matchbox, or services like electricity, telecom or transportation.

Even within direct taxes, the bigger chunk is corporation tax. This money is coming from corporate profits. Every consumer, irrespective of whether or not they pay personal income tax, contribute to corporate profits and consequently to this category of taxes.

In other words, 79% of the tax kitty is a contribution by the economic activity and all of its participants, not just those who pay personal income tax.

Are JNU research scholars the big beneficiaries of exchequer largesse? Hardly.

Even the poor are not the exclusive beneficiaries of subsidies. The Economic Survey this year has devoted an entire chapter to the matter of subsidies that go to the rich, titled Bounties For The Well Off. Analyzing just 9 subsidies--Kerosene, Electricity, LPG, Railways, Petrol, Diesel, Aviation Turbine Fuel, Gold and PPF--it found that share of subsidies going to the rich (defined as the top 70% of the consuming class) was Rs1.03 lakh crore. A good explanation of this phenomena can be found here.

So it's not just the personal income tax payers who contribute to taxes, and it's also not just the poor who benefit from. In fact the very people who whip out the tax argument benefit from such implicit and explicit subsidies.

Please click here to read more.

Huffington Post, 5 March, 2016, http://www.huffingtonpost.in/2016/03/05/its-time-to-put-this-ugly_n_9385984.html


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