Page 76 - EducationWorld January 2021

Postscript

Most over-taxed nation? stand that companies run by Ambani-Adani, ITC, Britan-
Hello, Kisan brothers! Is it rocket science to under-
nia, Godrej etc with large resources and reputations to
S INDIA THE MOST OVER-TAXED COUNTRY OF lose, will offer better contracts, farm-gate prices and
the contemporary world? If one adds up all the taxes logistics support than anonymous, sly, penny-pinching
Ipaid by the tiny fraction of the upper and middle commission agents and middlemen? Because of the
classes (only 14.6 million citizens earn over Rs.5 lakh per agriculture-industry divide, fruit and vegetable produce
year) obliged to pay income tax, it is arguable that India valued at Rs.93,000 crore is wasted annually, and rats
is the world’s most over-taxed nation. instead of humans are consuming the rotting foodgrain
For instance, on a modest salary of Rs.12 lakh per mountains in ill-maintained warehouses of the public
year, citizens are obliged to pay Rs.4 lakh as income sector Food Corporation of India. The plain truth is that
tax to the Central government. Moreover, a plethora of the country needs Ambani-Adani 1,000x to generate em-
indirect taxes are levied — excise on most manufactured ployment and tax revenues for government. Continuous
goods, GST (general sales tax) and service tax on a range neglect of primary education for over seven decades has
of services including food and drink in restaurants. In precipitated an intellect famine. Not only in rural India.
addition, property tax is due to the state government by
home owners, and heavy registration, petrol/diesel and
road taxes are payable by car and automotive two-wheel- Foreign investment blindspot
er owners.
To this list of official taxes, one must add parallel N THE INCOME TAX DEPARTMENT UNDER
taxes, i.e, bribes and inducements to the country’s 18 the Union finance ministry, arrogance mixed with
million government employees to deliver any and every Iintellectual inertia is discernible in abundance. The
public service or conduct of ordinary business. Nor is destructive power that the department enjoys is on full
that all. Then one must also add sums doled out to desti- display in the Vodafone and Cairn Energy cases in which
tute citizens as alms and charity. highly reputed international tribunals have held against
In all civilised societies, the social contract is that the Government of India for acts of omission and com-
in return for paying taxes, citizens are provided public mission of runaway IT officials.
goods and services. Yet the plain truth is that most Back in 2006, a Hong Kong-based company Hutchi-
government provided goods and services are so pathetic son Telecommunications International Technologies
that self-respecting citizens tend to avoid them, and (HTIT) sold a Cayman Islands company CGP Investment
hesitate mightily to step into a police station or court Holdings to the Netherlands-based Vodafone Inter-
of justice. So where does all the tax revenue go? In the national Holdings BV (VIH). CGP owned a 67 percent
next Union Budget to be presented shortly, please note shareholding in Hutchison Essar (India). The IT depart-
that government establishment expenses (salaries, rents, ment issued a tax notice for Rs.11,218 crore on VIH stat-
perquisites including swanning about in ministerial jets, ing that since HTIT had earned a capital gain on sale of
elaborate car convoys and foreign jaunts) consume 25 a company sited in India, VIH should have deducted tax
percent of the Union budget. Ditto state governments. at source. Yes the issue is complex. But the moot point
That’s where.
is that our own Supreme Court held that the IT depart-
ment’s claim for Rs.22,000 crore (after adding interest
Ambani-Adani 1,000x wanted and penalties) was unjustified.
Enter Pranab Mukherjee, then Union finance minister
in the Congress-led UPA government. To be one up on
OME PEOPLE — ACTUALLY THE MAJORITY — prime minister Manmohan Singh, Mukherjee pushed a
never learn. Right until 1980, some pundits say resolution through Parliament overruling the Supreme
S1990, the GDP of the neighbouring — too close for Court verdict, taxing VIH with retrospective effect.
comfort — People’s Republic of China (PRC) and Repub- The Permanent Court of Arbitration in the Hague
lic of India was on a par. Three decades later, PRC’s GDP held that the retrospective tax demand from VIH was in
is $15 trillion and India’s $3 trillion. That’s because from violation of a bilateral investment treaty (1995) between
1978 onward, the ruling Communist Party of China dis- India and the Netherlands. Similarly, following an
covered that native Chinese are natural entrepreneurs, offshore reorganisation of its India business by Cairn
and placed the country firmly on the capitalist road of Energy plc (UK), the IT department levied a $1.4 billion
free markets and free enterprise. Likewise, Indians are (Rs.10,234 crore) capital gains tax demand on Cairn
also born entrepreneurs and traders, perhaps the only Energy and seized its assets in India of equivalent value.
ones who can take on and compete with the Chinese. This demand was also overturned by the Singapore
But instead of encouraging and stimulating our billion International Tribunal (1991) as being violative of a UK-
entrepreneurs and businessmen, lefty layabouts and poli- India investment treaty.
ticians continue to pillory “suit-boot” industry leaders Meanwhile, the Central government, is moving heaven
and businessmen. and earth to attract foreign investment into India in the
This anti-business threnody is being sung by the lead- wake of capital flight out of China. Clearly, it isn’t aware
ers of the prolonged farmers’ agitation in Delhi. Their of the damage the runaway IT department is doing to
tune is that the new farm laws are an Ambani-Adani India’s image as a trustworthy destination for foreign
conspiracy to exploit the country’s 600 million rural investors.
population.

76 EDUCATIONWORLD JANUARY 2021