Economic Highlights
New
Delhi, 28 August 2010
MPS’
Salary & DTC
AAM ADMI PAYS THE PRICE
By Shivaji
Sarkar
The approval of a bureaucracy-edited
unimaginative Direct Tax Code (DTC) and higher salaries for the nation’s
lawmakers was the highlight of last week. There has been much brouhaha over
both. Though many would aver that the two do not have any correlation a careful
scrutiny would establish the connection.
The MPs have got a three-fold raise
in their salaries and allowances, forcing the moral brigade to question the
propriety. It goes by the hackneyed argument that a poor developing country can
not afford it. Is it correct? No. The lawmaker – the politician – is expected
to function like an old Bengali adage--“The brahmin’s cow should have less to eat
but yield more milk”. That cow never gave more milk but used to enter other
houses to rummage for food. Do we expect our MPs to do the same? In some cases
they had been doing so if the cash for questions and similar other scams are any
indications.
One needs to understand that
politics is an expensive, time consuming, labourious profession. On an average,
every MP has to tend to his constituency and help his voters and other non-voters
if he has to remain in the reckoning. On any day, not less than 10 persons, at
a very moderate level, would be visiting an MP’s home whether he is in Delhi or his
constituency. He has to as a minimum courtesy offer them a cup of tea. In many cases,
he has to arrange for their lodging, transport, food and even hospitalisation
without a demur. Indeed, the present salary certainly cannot take care of all
this and even the enhanced pay may meet only a part of his expenses.
The MPs argue that they must get
better and far more wages than a bureaucrat, even up to the level of a Secretary
to the Government of India. This is so because the bureaucrat does not have to
take care of any person except his family. Besides, the MP has to visit his people
at every occasion – birth, marriage or death-- and ends up spending more than
just on travel. In many cases he has to fund funerals. So the argument is give
the MPs double the salary of what the Secretary gets and that too tax free.
Well, that would be the principled
stand. But it can be counter-argued out that the MP should not be given that
much because he is succumbing to bureaucratic pressures and unable to aid the
people whom he represents. The moot point is that he has been elected to bat
for the people. His job is to guide the bureaucrats and not be misguided. But,
this is what he is not doing. Else, how could the same old Income-Tax Act, with
cosmetic changes be accepted as the DTC?
The MPs need to put their foot down
and reject it lock, stock and barrel. He also must lead the country to a debate
whether there should be direct taxes, which robs a citizen more than 40 per
cent of his income through indirect taxes. Sadly, even a beggar has to pay that
much.
Over the past six decades the nation
has been continuously looking at the budget for getting tax relief. But it has
turned out to be a joke. The DTC has only tried to continue with it. It does
not have a perspective. It does not explain why the highest tax slab has to be
30 per cent and not 20 per cent or less. It does not answer why many exemptions
are being denied if the tax has to be at 30 per cent. The DTC needs to simplify
the process and not continue with the complications.
The bureaucrats have created a myth
that the tax rates are the lowest in the world. The MPs have gulped their
arguments. They need to see that an average Indian pays 60 to 70 per cent of
his income as taxes and if inflation figures are linked, it this would add up
to another 10 per cent at the least. After spending 80 per cent of income on
taxes, would the citizen have enough to spend – consume -for the growth of the
country?
The DTC does not answer any of these
questions. Just adjusting small slabs and retaining the obsolete I-T Act of
1961 should not be the purpose of such an omnibus exercise. It should have
given a perspective. A code is a guideline for the future course of action. The
DTC simply does not have it.
The citizen is not born to pay all
his income to the authorities, whose accountability is often in doubt. The idea
for revising the Income-Tax Act was mooted primarily to simplify the cumbersome
rules, rationalize the tax structure and simplify procedures in order to reduce
hassles created by bureaucratic discretion. An unstated objective was to reduce
corruption. During the last few years a number of income-tax officials have
been held with huge accumulation of wealth beyond their known source of income.
Why does the DTC then not address these?
The DTC allows too many discretionary powers to the tax officials as does the
I-T Act. It leads to litigation and a thriving regime of appellate mounting
expenses on the Government as well as citizens apart from adding to their
humiliation and harassment. The expenses on tax collection have only increased
since Vijai Kelkar had given his assessment. Sadly, the DTC has not tried to
rectify it.
The MPs need to ask the Government
why it has spent so much on framing a code that leads to nowhere. It was being
addressed piecemeal through the budgetary process every year. Why is there this
publicity blitz for a DTC which in fact does not show any path? If the same
principles of a socialist era have to be retained, then why should one call it
a new a code? The MPs need to tell the bureaucrats firmly that they have done a
bad job and must rework on it
As it is presented in Parliament, the
MPs must jettison it and seek to redraft a visionary code that would remain
valid for the next 100 years or more. Rather it should become the bedrock for
all policies that are to be laid down in future. It must address the basic
questions-- of lowering tax burden to 20 per cent, linking taxes to the
inflation (higher the inflation lower than the decided rates) and treat
taxpayers as real masters and not criminals. The MPs have got the opportunity
and it is time they show they care for the people. ---INFA
(Copyright,
India News and Feature Alliance)
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