governement taxes

Mr Chidambaram as a finance Minister always finds ways and means of filling up the coffer of the government with new and innovative methods for the tax collections. some of these I am totally in agreement with as Government needs to collect money only from its people as its revenue earners. These are the following that I strongly feel about

• The taxes are skewed towards only monthly wage earners. In this case the amount earned is totally transparent and hence visible to all




• What about those who earn in cash and which will be more than the monthly earnings of these salaried people




• Also for those with a seasonal income, there is no relief at all. Take for example Actor/small time builders etc. In one year they may earn huge amounts, but next year it may be nil. so having paid 30% of their income as taxes in a year, what will they do in the next year.




• This same kind of situation is now applicable for those who have been laid off. This financial year, their income is very substantial - what about the next year ?




• In western countries there is a unemployment payout which will make those people who have lost their jobs to fall back on. But in our country there is no support system. I pity those youngsters who work in IT industry and who have splurged their money left, right and center and now have high EMI for their cars and houses and credit card payments looming large in front of their face. What will these people do. I am really worried. For this point public will say that ' these people enjoyed and are now paying for their mistakes'. but the entire society who profited by this excess spend also in terms of money circulation.
• Take the case of Service tax which goes up to 12.36 (including the educational cess of 3%) makes the services that much costlier. while the income tax is only the profits, these indirect taxes likes service tax, cst, st, etc are on the cost of the product or services. Also all the consumers are made to pay this irrespective of their income, geography, etc.
• Take the case of education cess which is applied in all the taxes that are collected. The amount collected under the education cess is enormous. Does the Government really spends that much money on the Education. Do we know the amount collected and the amount spend under this head. I am yet to research into it.
• Another factor that has always concerned me is the upper limit for the savings that are given a relief which is 100,000 wherein you deposit in bank deposit or post office or PF, etc which are all deposit which are very secure. But only this much amount can be invested - of course this amount also includes the insurance you pay towards your self and family, the children education needs, etc. Here the interest so received are taxable too. But take the case of investment in stock market or mutual funds - the dividends so received are non taxable. so many have invested in these speculative instruments. Why doesnt the government examine the interest received from term deposits to be non taxable - let there be a cap for this. This way there will be solid investment available for the people as a fall back instead of putting everything in speculative market. there are these small investors who are seeing their hard earned savings invested in stock market and whose value has been eroded by close to 40%.
• While earlier the post office savings were attractive (this also provided funds for the state governments), this ministry has made is so unattractive which also saw a flight of people going in for investment in mutual funds and stock markets - and who at this juncture are torn to pieces. My question is why should the government make things more attractive for these speculative investments.
• However I have to say that we definitely have a low tax structure in our country as only when you cross 600,000 (after deducting the above 100,000 savings window available) you tend to pay 30%, which I say is really good.
• My only request is that depending on the income slab give the savings window a higher limit so for a 500,000 bracket person, make that 200,000 is available for deduct able limit. this way you will make sure that there is a solid savings available for the people which will help them in terms of hard times. do you think a person who is now jobless can get a good value if he attempts to sell the shares he has purchased one year before. So who will make good his loss of in investment and his salary loss.
• The FBT is a good initiative - but once again aimed only at salaried class. of course, this makes that whatever is paid to the employee is totally accounted under the payable to the employee as most times those in kind are not looked as salary. so bringing the perquisites under the tax scanner is good. But taxing the hotel stays and travel - can somebody explain the logic of how this is a fringe benefit that is enjoyed by an employee. So when the nature of your job makes you travel where will you stay - why should the corporates pay a tax for doing their business across geographies. How will the corporates do the marketing expenditure.. But the funny thing is that in our country the biggest employer is the Government and it is exempt from the FBT. Earlier the salaries in private sector or even now in some sectors are more than the government. So these perquisites like government accommodation are the extra attractions that was more than making up the low salary for the government to attract people. Now the pay commission revisions are all making up the salaries of the government employees to be good. The amount of leave these people enjoy is phenomenal and there is no incentive for productivity nor is there is a penalty for non productivity. In a private sector if your don't perform you get stagnated and sometimes you also loose your job.

Like this there are a lot of things that I think and strongly feel about, but I know that there are very good analytical people at the helm of affairs who think through and then implement various things in the government level. With this I conclude this posting and look forward to your views.