Our budget suggestions to the Minister

India Tax Payer submitted budget suggestions to the Finance Minister. Here it is:

Ref: PS2019-20/05

Date:7 Jan 2020

                                                               

Union Minister for Finance

Government of India

New Delhi.

Dear Madam

Sub:  Suggestions for the Budget plans of 2020-21

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1.    India Tax Payer is a group of Tax Payers in India having over 20,000 members in it.

2.    Please accept our wishes and appreciation for the positive response from the Government of India and from the Ministry of Finance on various issues faced by the Tax Payers and the Industries. 

3.    We thank you for the opportunity to present the following suggestions to you for the Budget 2020-21.

4.    Madam, we would like to impress upon you the fact that human innovation and growth of human civilisation has always happened when the human thought and action has been unbridled. All that is needed is a free environment, devoid of shackles, a level market field and a clear regime of law has always spearheaded economic growth. And civilisations have prospered only when there had been economic growth.

5.    Our suggestions, madam, are made with market levelling and free growth in mind. Our suggestions promote individual wealth, public monitoring and will spur economic growth. This is the perception of India Tax Payer.

6.    Income tax has been identified as the single largest de-motivator for earnings in any country, across the world. Countries world-wide are now moving towards either zero income tax or a flat income tax. Flat income tax is a single slab income tax. That is, up to a specific number, say, Rs.10 lakhs there will be no income tax applicable on the citizen. If she earns over Rs.10 lakhs, then whatever is her earning, she will pay a fixed rate of income tax.

7.    Zero Income Tax: We would, ideally, like to have the Income Tax scrapped. In case, the ideal is not attainable, the best alternative would be to go for a single slab flat Income Tax.

8.    Flat income tax: Flat or zero income tax is the rule in about 66 countries across the world! Simple reason being, it is easier to charge and easier to collect. 

9.    Gross Income and Not Nett Income: Flat incomes are usually charged on gross income and not on nett income. This is comfortable because there are no deductions that are allowed. This does not involve calculation of the Net profits which are the great source of fraud and black money. Whatever is the gross income, a palatable percentage of it is charged as income tax. Example: Every person over Rs.10 lakhs shall pay an income tax of 3 to 4%. We need to appreciate the fact that she is paying on Gross Income and not Net Income.

10.Gross Income Liability: This will reduce corruption drastically and the power of decision with the Tax Official will be removed. This would also ensure that the targets set by the government will be achieved. Whether the rest of our suggestions are done or not, we request you to remove this Netting of taxation and go for fixing liability based on gross income.

11.Goods and Services Tax: While the great strides taken in the implementation of GST is phenomenal, we still have a long way to go. More than two years since the implementation was done and this is the right time to make really, strategic moves that would ensure we make quick and remarkable progress in our economic front. 

12.GST on Electricity: Electricity currently suffers duty at the rates decided by the state Electricity Regulatory Commissions. We request you to take electricity out of this fold and bring it under GST. Maintaining it at around 5% will help power companies breathe easy, marginally. In addition, it will also regularise many operational parameters of other industries as well.

13.GST on Fuels: Similarly, other fuels such as Petrol and others may please be brought under GST along with many other petroleum products. This will ensure that the revenue to the Centre increase. Of course, a due sharing with the state Governments may also be worked out. This will also bring in a huge change in our economic scenario.

14.Subsidies: We still remember the 2014-15 when the Modiji Government came to power. One of the first steps implemented successfully was the Direct Benefit Transfer of Gas subsidies. It was a wonderful step, making use of the Aadhar details available, opening up new bank accounts and also ensuring that the subsidies reach the beneficiary. Additionally, it was very thoughtful of the Government to transfer gas subsidy in ADVANCE! A move that we will always appreciate this Government for. 

15.Direct Benefit Transfer: In the case of other subsidies also, we were expecting DBT to come in place, avoiding the middle men and thereby, reducing corruption and wastage of government revenue. Some of the major subsidies such as Electricity subsidy and the Fertiliser subsidy are still given through intermediaries which is causing a lot of wasteful expense. Last year, the Finance Act 2019 covered this aspect on Electricity Subsidy. But there was no implementation plan and nothing came out of that mention. 

16.DBT of Electricity Subsidy: Direct Benefit Transfer of Electricity Subsidy will bring in a level playing field in Electricity market. All UDHAY signed states that are deriving benefits from the Centre’s policies may be persuaded to do the DBT of Electricity Subsidy with a clear target date of implementation.

17.DBT of Fertiliser Subsidy: The same is the case with Fertiliser Subsidy. Every company has to sell their product on a level playing field and not get an undue advantage. This will help in making the companies more efficient as well as give farmers Fertilisers at the cheapest possible price. 

18.Money from the Government: DBT will be a way of paying money directly to the people’s account. This will be a good performance indicator showing that the poor and marginal, farmer and common man, gets money every month from the Government as they do with Gas.

19.Real Estate: RERA has done a host of good things to the industry. However, this ropes in the large corporates whereas small and mid size companies promoting real estate businesses are not really pulled up for the large scale parking of illegal funds. If this has to be neutralised then the government could introduce clear recording of registration transactions and monitoring them as well.

20.Withdraw from Businesses: In line with Modiji’s original slogan ‘Minimum Government; Maximum Governance’, we submit our suggestion to you, madam, for withdrawal of government interest in major businesses such as Railways, Roadways and others. 

21.Railway Regulatory Board: To start with, as a first step, Railway Regulatory Board may be formed at the Central and at State Levels. A Railway regulatory Act for all stake holders of railway business may please be adopted. In addition, individual railways may be spun off into separate companies to improve their performance and independence both financially as well as administratively.

22.Roadways Regulation Board: A similar Roadways regulation Board is required in order to ensure that the Roadways work profitably for invested private players. The fate of IL&FS and that of IVRCL hold proof of what could happen to private players, if the businesses are not regulated by independent and neutral agencies.

23.Regulatory Boards: There are numerous regulatory Commissions, Authorities already formed and in operation. Many of these are not truly independent and do not do their assigned roles in right earnest. For example, the failure of the State and Central Electricity Regulatory Commissions are largely written on the shrinking Electricity Market. Similarly, IRDA has failed in its prime purpose of protecting consumer interest and has been pulled up by many courts repeatedly. With consumers losing interest naturally, the industry is in doldrums. Not talk of the bodies such as TRAI, DGCA and many others. These regulatory bodies will soon oversee the failure of their respective industries, if they have not already done that. 

24.Neutral Regulatory Bodies: Most of the regulatory bodies are populated by interested members who do not have the customer perspective. Second, they are mostly from the powerful industry lobbies and they design a business that favours a few and give a raw deal to the consumer. Over a period of time, consumer’s interest wanes and he learns to live without them. And then, the regulatory body tries to force the government to impose a rule to make use of them! Example, road insurance and now Fastag! Regulatory Bodies need to have representation from the public and the consumers who are users of the industry. Tax laws framed without tax payer involvement can only be a failure! But that is what is the Direct Taxes Code trying to do, with no involvement of tax payers!

We request you to please include relevant consumers and users into the decision making body. For instance, with Electricity Regulatory Authorities consumers should be the chairmen of State Commissions, Consumers should be the head of Insurance Regulatory Authorities, etc. Similarly, Direct Taxes Code committee should be headed by Tax Payers rather than Tax Collectors. So that tax collection will be a success. 

25.Advocate for Inefficiency: At no point of time, our Government should be an advocate for inefficiency. In case of Fastag, the Government is just that. If Fastag is good, people will buy it by themselves, why make it compulsory. If it is not good, why force people to buy something that is not good! Either way, there is no sane logic for imposing something on the people. So is the case with Insurance policies. Subsidy for insurance policies such as tax deductions, is a support for inefficiency. The same logic as in the case of Fastag, is applicable. There are numerous subsidies like this given to various government run industries either forcing people to buy from them or giving them undue advantage, encouraging inefficiency in the business. This would eventually lead to failure of the industry. 

We request you to please withdraw all those subsidies, subsidies given to insurance companies in the name of tax rebates, etc.,

26.Black Tax: We wish to present to you the fact that much like the bad effect the Black Money has on the economy, the black tax is equally bad for the economy of our country. Black Tax is that income to the Government which is generated by means other than taxes and is an indirect and ‘unseen’ income to the government. Examples: Provident Fund, all concessionaire charges, bandwidth charges in telecom business and many others. In most cases, these are looked at as common resource and therefore, auctioned. Every one of these will add to the unseen income of the Government. 

Though as a part of the Government, it might appear as a good revenue source particularly, when the fund is a scarce resource, we need to understand that this is actually drawn from the market. And therefore, from the people! This would have a bad impact on the way the market works and would be the creator of an uneven market place. This is detrimental to the economic condition of the country.

We request you to please reduce the Black Taxes as a first step. Please remove the auctioning of resources since it creates uneven playing field and stops new entrants from getting into the business.

Thanking you for your patient reading.

Yours truly,

For India Tax Payers

President