Super Rich or “All” Super Rich?

 After the Government of India took enough pains balancing the budget, the taxpayer now has the job of budgeting the balance. Post the recently proposed Union Budget 2013-14, the Finance Ministry has introduced various measures to accelerate the growth of the Indian economy.

To restore the health of the economy and look forward to much higher growth ahead of national elections, due by next year, Finance Minister P. Chidambaram went on  to levy more taxes on the rich of India. What led to a large hue and cry by the high-earning Indians was the announcement of a surcharge of 10% on those earning an income of Rs.1 Crore or more, the measure being in place for only a year.

How the government plans to identify these ‘super-rich’ individuals, with the absence of a clear definition of who the government considers as ‘super- rich’ is a question that will be raised not far from today. 

I believe the predicament that the government will have to face today is the discrepancy between the number of registered tax payers and the actual people who pay their taxes. The need of hour is better administration.  The finance minister has already pointed out that there are around only 42,800 people who will be affected by the extra tax on pay above Rs. 1 Crore. But there are a substantial number of individuals with good income who fall in this bracket. The focus, hence, needs to be on ensuring that the individuals who are avoiding the taxes should be brought under the tax net. Even as this move will ensure larger numbers in terms of tax returns to the government, the real issue is around compliance. Better compliance will eventually bring more people, who have thus far avoided taxes, into the net.

Not being able to identify these evaders, let’s call them ‘super secret’ of India, can lead to 2 uncomfortable situations for the Government:

1.  The confidence of the 42,800 tax payers, who declare their assets & hence pay taxes, in the government, will suffer a blow if they know that there is a wider group who comes under the said slab, yet are not paying the rightful tax.
2.  If in case in the future, the ‘super secret’ of India are revealed, the FM’s proposal of the 10% levy will fall flat, owing to the revelation that the government was unable to chart out a clear method to bring this group to light.

Maybe the "amnesty" given out to the large population of people avoiding taxes will get them to pay their taxes. But the government has to showcase accountability and that all the tax payments are put into good use for the betterment of all concerned.

Dr. Radha Krishnan, the Second President of India, once observed “the practitioner of this evil - the hoarders, the profiteers, the black marketers, and speculators are the worst enemies of our country. They have to be dealt with sternly, however well placed, important and influential they may be, if we acquiesce in wrong-doing, people will lose faith in us.” And it may already be coming true, with so many cases of money laundering and corruption cases crawling out of the wood work, the Government is already drawing flak from all corners. But maybe if they can get back to identifying "the wrong-doers” and of course, the absent tax payers, then maybe faith will be restored.

But in the end, it is not for the government to remind us, but our duty and responsibility.