Somesh Arora: Taxpayer empowerment: Still a distant dream here

Imagine more than Rs 38,000 crores spent on a sports extravaganza in a country that is till now unable to erase hunger deaths from its map. And the money spent so far is not the final count. Some contactors raking mullah, in the process and some political cartels benefiting from cuts in money.

The vigilance machinery to have enough to keep it busy for next four years, so shall be  the August office of Auditor General of India. The cost of repairs of the stadium, being more than the cost of construction,  of a much bigger stadium in China.  The Government of the day,  permitting the criticism by its own MPs, in a bid to monopolize both the roles of Government, as well as Opposition. Unfortunately for the opposition the matter cannot even be taken to the Competition commission, which in any case is waiting to open its account with something noticeable..

Come 2011, the U.S. shall be seriously debating a bill to empower its taxpayers with the rights to indicate discretionary spent to herald a new era of tax reforms. Unfortunately for our taxpayers the shabby treatment of not being counted except as tax evader or defaulter continues. From the earlier days of British India, when the right to franchise was limited to tax payers only and it was considered a duty of tax collectors to properly see-off any visiting  Continued from Page 1

taxpayer, to the decades of 1960`s to 1980`s, when the high rate of taxation ensured that tax evaders were in plenty and mixing with tax payers was considered as a professional sin for Tax collectors and further to the last decade where lip service came to be bestowed upon tax payers through `Samman Certificates’, which have by now started gathering dust mites with the recipients, it has been roller coaster ride for tax payers.

The involvement of taxpayers to indicate discretionary tax spent is a far cry. There is no concept of social audit of how the money of the taxpayer is being spent. Even the top of the bureaucrats( at least some of them) can be seen believing in the concept ` Sarkari ghadi for Memsaab ki tarkaari”.  The best Group D employee is always the one who scouts for the cheapest veggies for Memsaab, even if it means burning the fossil fuels for upto 50 while Bada sahib may be delivering lectures on ` How  to keep the city Green and reduce Ozone layer depletion?’

 We are toying with the idea of Taxation ombudsman to listen to the Tax Payers complaints, but the holy office is likely to be manned by the retired tax officials rather than the Tax Payers, whom the Departments have declared worthy of  `Samman’. Who has the better credentials to deal with the complaints of taxpayers, a genuine and respected taxpayer or a retired official who has been groomed in the art of collecting more only till his deferred retirement entrusts him with the new task, is for anyone to judge.

It is time that Government should think in terms of showering some privileges on the people who pay their taxes genuinely and properly. Why cannot a person who has been adjudged with ` Samman’ certificate and has paid huge taxes to the satisfaction of the concerned Department be considered for nomination to Rajya- Sabha by the President, if need be even by amending constitution?

 If the Excise and Customs Department boasts about having the lowest cost of collection per thousand Rupees equivalent in the world, then credit equally goes to Manufacturers Tax payers, who indirectly for them collect indirect taxes from their  massive customer base, and pay it to the Ex-chequer, thus reducing the burden on Indirect Tax Collectors. How many times has Excise Department even tried to share this credit with genuine and good tax paying  manufacturers? Can’t it be considered that some benefit of this reduce cost of collection be ploughed back to these units by way of incentives. Say of Rs. 10,000/- for every one crore collected and paid in the Ex-chequer by them. Is it not a fact that every excise employee that they engage for maintaining elaborate Excise duty records saves some administrative costs to the Excise Department? This fact will have to be faced by the Department, once the broad based GST will come into existence. Already the cost of collection has started augmenting ever since broad based service tax has come in the kitty of the Department. Under GST regime, the Department will have to deal with not only manufacturer assesses but also with small traders and service providers in far flung areas. It is time, Department seriously thinks of incentivising monetarily some of the big tax Payers in each category, who have consistently good track record over a period of time and even considers them for the coveted position of Tax Ombudsman. In various organizations under Ministry of Labour like ESI and EPFO, the system of involving all the stake holders i.e. employee, employers and the Government has functioned successfully and has only gone to strengthen the democratic top management bodies like Board of Trustees

Again, the potential hazard that a spate of interests and penalties pose to any tax payer, who may be wanting to pay taxes genuinely but may not like to pay in excess, because he has his own interpretation of the complicated tax provisions, can be mitigated by allowing a discretionary payment in ` TAX VOLUNTARILY EXCESS PAID ACCOUNT”. Till the time and to the extent, such account has a credit balance, the assessee will not be levied any interest or penalty for that period and only a debit entry to such account will suffice. This will  cover up his risk in case he has to incur some liability on account of some interpretation of law, which eventually turns out to be a misinterpretation. The account can also allow some crediting of interest (May be equal to savings bank account) by the Government, if the balance remains unutilized say even after stipulated period of three years. In case the balance proves insufficient even then the interest and penalty can be levied on the amount found short in this account only. The measure as suggested above will not only remove tax related uncertainty, but will also augment medium term source of Financing through savings to the Government, which can be used for programmes like poverty alleviation or Infrastructure Development. (But definitely not the stadiums whose ceilings act like filters to the rains and  only to lubricate the vigilance machinery of the Government and spur it into action.)