ASK WHAT THE COUNTRY CAN DO FOR YOU

On 1^st March 2016 I saw the honourable Finance Minister of India sitting on a bench in Lodi Garden.  He had a twig in his hands from which he was gently plucking tiny leaves and from a distance I thought he was muttering “She loves me, she loves me not”.   He had a partially lovelorn look on his face.  Out of concern for the economy, I went close to him and realized that he was actually repeatedly muttering “We will tax PF, we won’t tax PF, we might tax only the interest, we surely won’t tax PPF …”.

The 2016-2017 annual budget was announced with the usual fanfare.  On that day a co-worker mentioned at the lunch table that the government was introducing a tax on Provident Fund.  I told him I did not see anything to that effect on the budget headlines on the internet.  Nor did we see anything on the TV in the cafeteria.  The topic ended there.

The next day the newspapers reported the government’s intention to start taxing EPF (Employee Provident Fund). The reactions started pouring in.  Whatsapp groups started buzzing early in the morning.  A sample of media reports that poured in during the two days  is reproduced below.

“EPF: A googly that could stump the salaried class” -       Now, 60 per cent of savings under the Employees’ Provident Fund will be taxed at the time of withdrawal	thehindu.com, 1st March 2016
“EPF tax in Budget 2016: Centre rushes to clarify, says PPF tax exempt, but EPF to be taxed on withdrawal, aam aadmi worried”	financialexpress.com, 2nd March 2016
"Final stand on taxing EPF during Budget debate: Arun Jaitley"	Times Of India, internet edition, 2nd March 2016
“Budget 2016: Calm down folks! Tax on EPF withdrawal may not be all that bad, say experts”	firstpost.com, 2nd March 2016
“Under fire from board, government looks to sugarcoat EPF tax”	indianexpress.com, 2nd March 2016
“"Budget 2016: Why government is wrong in taxing EPF"”	economictimes.indiatimes.com, 2nd March 2016
“Budget 2016: Provident Fund to be taxed, unions warn stir”	indianexpress.com, 2nd March 2016

The above headlines paint the Finance Minister in a rather poor light.  It is possible that the ministry did not give the proposal enough thought.  That would mean they are casual and incompetent.  It is possible that they are testing the waters.  That would cast a shadow over their awareness – we elected you to govern us, can’t you at least try to be sure about what we want – couldn’t you have judged this before reading out the budget?  Worse still, they might have proposed something utterly atrocious (“corpus and interest to be taxed”) believing that the subsequent magnanimity (“only interest will be taxed”) would result in a negotiation deftly secured. That would make them shameless and unscrupulous in my book.  Whichever way one looks at it, the Finance Ministry does not come out too well.

On 2^nd March 2016 The Indian Express editorial dealt with the issue very maturely  – “The PF Storm - The government must present a more convincing case for doing away with tax exemption on EPF corpus withdrawals” (http://indianexpress.com/article/opinion/editorials/the-pf-storm/).  The editorial brought home the simple fact that we get taxed when we earn.  If one can accept that simple fact as one ought to accept the reality of death, then one concludes that yes, the PF interest must get taxed.

Why is it then that most of us felt outraged at the PF tax proposal.  Here’s a litany of probable reasons.

Since the day I started working (13^th January 1987), an unwritten rule was handed out – this is a pension-less world, you need to set up your own retirement.  PF, PPF et al were the most prevalent ways to do that, and that is what most of us have been doing.  We based our calculations on that (at least those of us who are boring enough to calculate). Now after thirty years of careful accumulation if you tell us that in the last few overs of the game the government has decided to reduce the size of your bat, but the target remains the same – then how fair is that?  And honestly, we all know the target is ever increasing in this country thanks to inflation. You want to create a pensioned society? - start with the baby boomers who still have thirty years of employment ahead, take them into confidence and take them towards a pensioned retirement.

You want to tax our Provident Funds, yet you allow a tycoon who defrauded employees of mandatory employer contributions to strut around freely in spite of a court having issued a non-bailable warrant against him?  I am not scared of naming the fella, I just find it disgusting to even utter his name.  Not to mention the fact that the willful defaulter owes God knows many hundreds of crores to public sector banks, who you will now recapitalize by applying a haircut to health services, education and other services you owe us in exchange for taxes.

You are very diligent when it comes to collecting tax from us.  But then why the lethargy in the matter of curbing tax evasion?  Show me one strong measure in the budget that will attempt to stop the tax evasion.  Google “tax evasion statistics in india” and you will find a long list of resources available in the public domain which try to estimate the magnitude of tax evasion in India.  The book “The Black Economy in India” by Arun Kumar claims the extent to be 14 trillion rupees i.e. 14 lakh crore rupees annually.

Justice Arun Chaudhari of the Nagpur bench of the Bombay High Court recently while passing an order called on citizens to raise voice against "this menace" (corruption) and "refuse to pay taxes by launching a non-cooperation movement" if the government fails to control it.  Ironically this “anti-national” statement was made from the very city which today is the capital of India’s new-found, redefined nationalism.

The Constitution embodies a plethora of contracts between the state and the citizen.  The state and the citizen transact continuously to execute those contracts.  I had read somewhere that “A business transaction in which one of the involved parties is designed to continuously lose is a fraud.”  The Indian citizen’s “I pay tax you provide services” contract with the state has turned into the sort of business transaction which is effectively a fraud perpetrated on the citizen by the state.  I sincerely hope that was seditious enough, though the word “effectively” in lieu of “willfully” was intended to take the poison out of the sedition sting.

The time has come in this country for citizens to turn John Fitzgerald Kennedy’s immortal quote on its head and with minor modifications say, “Ask not what you can do for the state, but what the state can do for you”.  If this renders me unpatriotic or whatever is the nationalistic epithet of the season, to hell with it.  Come get me.