JULY 10, 2019

By Vijay Kumar

IN para 106 of her Budget Speech, Ms. Nirmala Sitharaman said, "Mr. Speaker, Sir, I begin by thanking our taxpayers who, as responsible citizens, perform their duty by paying their taxes. It is because of their valuable contribution that our Government is able to work for our collective dream of inclusive and all round development of our nation. At this juncture, I find wisdom in a line from Pura Nanooru, a Tamil Sangam Era work by Pisirandaiyaar. The verse, "Yannai pugundha nilam" was sung as an advice to the King Pandian Arivudai Nambi ……

An unauthentic translation of the Tamil poem would read as:

If an elephant is fed with rice harvested from the fields,
even a small strip of land will feed him for days.
But when the elephant enters the fields to forage,
more rice is trampled upon than eaten.
Acres of land lie ravaged.

Likewise, when a wise king collects his taxes methodically,
his coffers will be full and the country will prosper.
But when a weak king and his ignorant, ostentatious officers harass the people for taxes, his kingdom will be like the fields tramped by the elephant.
He gets nothing and his country, too, will suffer.

This was written more than two thousand years ago and when the Finance Minister read it in Parliament, it appeared as if it was written in 2019. For far too many years, the Indian Tax fields have been trampled by the mighty elephants. Like the farmers who never stopped cultivation, in spite of the ravage by the elephants, the Indian businessmen continued their pursuits withstanding or rather notwithstanding the elephantine attacks. It is a tribute to the tenacity of the Indian businessmen that he continues in business despite several agencies of the Welfare State hounding him.

It is heartening to see the Finance Minister bringing in that 2000-year-old elephant into her budget speech. Only if she puts the moral into practice, she will get all the taxes she wants without trampling the fields. But then, we have made our taxation laws so complicated that no problem can be solved without creating ten more.

Carrot and Stick

Once upon a time an ingenious farmer devised an effective method to lure his donkey to pull his cart. He tied a stick to the bridle of the donkey with a carrot dangling from the far end of the stick, just out of reach of the animal's mouth. Attracted by the sight and smell, the donkey steps forward to bite at the carrot, but of course, as it is attached to the stick, the carrot also moves forward and remains out of reach. Not being spectacularly brilliant, the donkey repeats the same action ad infinitum, thereby pulling the cart, until the poor animal collapses from exhaustion.

Over the years, the phrase has been amended to read "carrot or stick" instead of "carrot and stick" an illustration of an authority holding a reward (the carrot) in one hand and a punishment (the stick) in the other.

Are our taxpayers treated with "carrot and stick" or "carrot or stick" policy? Why do they call taxpayers ass-essees?

What did you get in the Budget?

Thanks! A businessman was asked, "what did you get in the budget?". He replied, "Thanks". What?, "Yes, thanks - in para 106 of her budget speech, the Finance Minister said, I begin by thanking our taxpayers who, as responsible citizens, perform their duty by paying their taxes. This is what I got, she thanked me!."

The New Era GST

In para 132 of her speech, the Finance Minister said, It is also proposed to move to an electronic invoice system wherein invoice details will be captured in a central system at the time of issuance. This will eventually be used to prefill the taxpayer's returns. There will be no need for a separate e-way bill. Its roll out would begin from January, 2020. Electronic invoice system will significantly reduce the compliance burden.

This should have been done right in the beginning. We could have avoided all the hassles, but anyway, better late than never. Maybe 2020 will see a new era in GST with less of elephants and donkeys.

The FM also mentioned, "In the initial phase GST witnessed certain teething problems. This was natural considering the scale of the reform. However, the Council, Centre and States proactively worked to resolve these issues. GST rates have also been reduced significantly, where relief of about 92,000 crore per year has been given. We should not lose sight of this fact while judging the performance of GST."

The Complex Numbers

In his 2018-19 Budget, Mr. Arun Jaitley hoped to collect 7,43,000 Crores as GST. In his Interim Budget for 2019-20, Mr. Piyush Goyal reduced this to 6,43,000 Crores, (One Lakh Crores gone), but hoped to collect 7,61,200 crores in the year 2019-20. Now in the latest Budget, Ms Nirmala Sitharaman has not changed the 2008-19 figures of 6,43,000 Crores. (She probably has the figures, but they may not be worth reporting.). But instead of hoping to collect 7,61,200 crores as Piyush Goyal did, she hopes to collect only 6,63,343 crores in 2019-20. The poor lady must be finding it really tough to manage the finances. Her interest bill alone is 6,60,470 crores. Compared to the Finance Ministry, the Defence Ministry must have been a picnic spot.

All the best madam, but please ensure that the elephants do not trample the fields and that the donkey does not collapse.

Until next week