Tuesday, June 7, 2016

Over-cess-ed!

There has been a lot of talk of late on social media about the wide variety of indirect taxes that people in India are subject to. It can be traced back to a picture on social media from a restaurant bill showing the large number of taxes that people have to pay for all services - all people, not just the salaried middle class, but anybody who uses any service in the country. of course, it is a different matter that the 'service charge' shown was not a tax but a charge imposed by the restaurant, but the larger message is that with two layers of state-imposed VAT, the Krishi Kalyan cess, and the Swacch Bharat cess, Indians are paying a lot of taxes.

From one perspective, this should not be surprising. Income redistribution is something that the middle class has long supported, and it should not come as a surprise to them that it is their income that is going to be redistributed. Sure, politicians will make it sound as though they're being ripped off, but the fact is, statistically, they're better off than a vast majority of people, and they are the ones who will have to pay for socialism. While people crib on Facebook on their smartphones about the need to support farmers, they don't seem to see the irony of opposing a Krishi Kalyan cess! It takes money to help farmers - Facebook likes won't do it!

But from another perspective, there is a point. The socialist economy is so rigged against almost everybody - the middle class is heavily taxes, while farmers commit suicide - while a small group of vested interests make a lot of money. Every cess is an example of unimaginative policy making and desperate budgeting. India has a government that wants to provide first world benefits to everyone with third world funding, and people support such crazy policies through their vote. People should not be paying taxes on everything, for every little scheme that Delhi can cook up. Indeed, so much money has been spent already on so-called welfare with so little outcome, that one really wonders where all that money went, and whether doing the same thing again and again, hoping for different results in the face of decades of data saying otherwise, is not indication of national insanity.

Politically, Arun Jaitley clearly does not politics. Mixing the popular if ineffective Swacch Bharat Abhiyaan with the word 'cess' is a huge mistake that will alienate some of the BJP's core voters. If he has any sense, he will just play around with tax slabs and not introduce any cess in the future. After all, a cess is the closest thing to immortality on this planet (paraphrasing Reagan) - once introduced, it is next to impossible to get rid of it. 

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