Friday, December 5, 2014

The game of cat of mouse continues

Thought for the day
"Wisdom is oftentimes nearer when we stoop than when we soar."
-          William Wordsworth (English, 1770-1850)
Word for the day
Contrite (Adj)
Deeply affected with grief and regret for having done wrong; penitent;
(Source: Dictionary.com)
Teaser for the day
Which party needs to worry most about coming together of splinters of erstwhile Janta Dal - BJP or Congress?

The game of cat of mouse continues

After reading the 3rd report of the Tax Administration Reform Commission, I am reminded of the tale of Cat and Rats, that I have shared with readers once earlier also.
“Once the king rodent called a general assembly of all rats to ponder over the rising feline threat. Everybody was too concerned and bothered about the menace. After a long deliberation, it was unanimously agreed to appoint a strategic consultant to advise on the matter. The consultant so appointed studied the problem in great detail and came out with this voluminous report, that primarily highlighted that cats are far more powerful, wise and smart animal than mice. Therefore it is extremely difficult for the mice to put up a credible defense against the menacing felines. The only way to counter the threat, the report egregiously suggested, is that all rats should become cats.”
The report just states the "too obvious". Besides being too academic, at places it is seen conspicuously flirting with naiveties. There is nothing remarkable in suggestions like simpler procedures, use of technology for data mining and identifying cases of non-compliance, lesser number of exemptions and deductions etc. However, going back to controversial and mostly unsuccessful measures like FBT and BCTT shows lack of innovative ideas and progressive thinking.
For example, consider that the panel suggests that agriculture income higher than Rs50lacs should be taxed at regular rates. It however does not explain how a farmer in India can earn more than Rs50lacs from agriculture. The average land ceiling for agriculture land in India may be 25acres. The average annual yield per acre varies from Rs20,000 to Rs. Rs1,00,000.
If the number of farmers earning more than Rs50lcs is material, the panel could have assessed how these farmers are earning so much from agriculture. If it is through leased land, whether the government needs to examine the benami holdings. If it is case of higher yields, whether the department should examine the probability of coloring of money in the garb of agriculture income. Some states have liberal land ceiling for horticulture. But the panel is not suggesting segregating horticulture from regular farming.
I also found the following quote from the report amusing:
"It is an admitted fact that the tax culture is lacking in India. Despite considerable efforts to widen the tax base, the number of taxpayers is about half the number who should pay tax if they adhere to the law. Although the rates have been lowered over the years, the country still lacks the desired tax culture that exists in developed nations. It is time perhaps that tax is not considered a burden but a price for public services, if not for civilisation itself."
"To develop a tax culture, revenues collected should be wisely spent and taxpayers should be able to see how their tax money has been spent. This will encourage them to pay willingly and may be happily. Tied to this is the need to curb corruption and tax evasion. Every rupee collected that is misapplied reduces monies that would otherwise be available to the government for developmental purposes."

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