Personal Income Tax Payers should be incentivised

Personal income-taxpayers in India live in an abnormal environment of taxation where they get next to nothing for compliance and good citizenry. Sure, it can be argued that they get roads, utilities and other infra. But these are delivered to all citizens, including those who systematically evade taxes, giving honest taxpayers only the advantage of a good conscience.

Other countries with high income-taxes and hefty inheritance tax can justify their tax regimes in a way that India can’t. They deliver more to taxpayers.

Young Indian families caught in the tax vortex have to pay ever-increasing fees for quality education for children. Most of our state schools are a stepping stone to basic literacy for the completely marginalised. It’s no place for those preparing themselves for survival in a hyper-competitive environment.

We pay taxes that leave us with dirty air and garbage mounds. We then pay more to buy air purifiers to breathe better. Our public transport is always overcrowded, sometimes unsafe and rarely comfortable. So, we spend on private transport that clogs our roads and adds to pollution. Affordable quality public housing is still a misnomer. So, we willingly get fleeced by private developers.

The rich, smarter than the 99% therefore, want their money to be saved from inefficiency and the government’s grip. Increasingly, Indian’s billionaires have moved residence tax- free places, such as Dubai or Antigua, or low-tax countries, such as Singapore, despite their social media patriotism. On the other hand it is tax terror for the taxpayers.

The state should offer taxpayers incentives, such as substantial discounts for insurance, healthcare and education, giving them tangible benefits. Non-taxpayers will know they are losing out in a system that rewards payees.

In a country of more than 986 mn voting adults, only 20.8 mn – roughly 2% – paid personal income-tax in FY2022. Of this, only 0.5% pay a valuable chunk.