The fact that income tax fairs have to be arranged each year speaks volumes for the lingering negative attitude of a broad segment of the population towards parting with the due share of income to the national exchequer. No wonder, in academic parlance the country has been branded as the lowest tax effort one among the developing nations. But the tax regime in a country is as good as its governance is. The imposition of seven per cent vat on private universities and then backtracking on it in the face of mass demonstration by students should corroborate this fact. A similar misdirected effort is towards realising four per cent tax on computer and technological gadgets. But all these are indirect taxes often realised in the form of value added tax (VAT).
What about taxable income of companies, businesses and individuals? The fact that there are fewer than one million taxpayers in a country of about 160 million, hardly make justice to the cause of tax payment. Neither the authorities nor all the eligible taxpayers have done what is expected of them. The tax regime is yet to be congenial or efficient enough for bringing under the tax net all who qualify to file tax return on the one hand and a large portion of the population which is still averse to paying taxes, on the other. One of the reasons for skipping tax return is illegal income. For a country now on course of getting digitised within a few years, this has to be considered a disgrace, though. Even many TIN (taxpayer's identification number) holders do not submit their tax returns regularly. How can this happen? If there is no mechanism to get at those TIN holders defaulting on tax payment, how can others with no such definite clue be brought under the tax net?
Clearly, the potential of expanding the taxpayer base has not been explored sufficiently. The task of identifying people capable of paying taxes may be difficult but not impossible. If the country's per capita income can be assessed, why should the issue of wealth creation remain outside the pale of national financial database? Why should there be scopes for businesses to hide their income?
The problem lies in the financial corruption regime. A vicious cycle has developed with people in power, those in charge of ensuring that the financial matters are transparent and people intent on tax evasion serving each other's narrow interests in place of the broader national interest. To stop such irregularities, the need is definitely for smart ID card. Its introduction is already in contemplation. But this has to be expedited with utmost urgency. This card will help trace out financial details of every individual and act as an effective deterrent to tax evasion.
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