Does paying TAXES make you more responsible towards nation?

Soon after graduation, I took up my first full time job. A month later, a handsome amount was deposited into my bank account as my first month salary. Few days later, I found that a portion of my salary has been deducted as income tax. I remember, for the first time, I walked on the roads of my city (Hyderabad) with a sense of feeling that, now I have financially contributed to the development of the nation. It wasn’t about how much I have contributed; the feeling was more about being responsible towards development of the nation.

When I heard the news, some screwed up lady politician in India wanted to build her statues with public money, my instant reaction was ‘… whose money you are using for building your pathetic looking statues?’ I guess, almost every tax payer had a similar reaction. There is so much of poverty, illiteracy, unemployment and lack of health care in India, and yet precious tax payers money in being wasted in constructing statues!

I soon realized, it wasn’t just that one particular lady politician. Several other politicians have abused the tax payer’s money in India and it’s a very common thing. It made me wonder, do these politicians care for people’s money? How can people just remain silent when their hard earning money is being wasted?

After a bit of analysis, I found that only 8% of Indians pay taxes, leaving about 92% (~1 billion people) who are either not eligible to pay taxes or found a way to escape taxes. So, we are part of a nation which has about 1 billion people who haven’t contributed even a paisa from their pocket towards the development of the nation. What is even worse, majority of these non-tax payers do not realize from where the government gets money to construct roads, irrigation projects, transport systems, etc. For them, it’s just government money. And when some political leader announces that he/she would give free electricity or gold, they jump to vote in his/her favor.

Clearly, there seems to be a ‘disconnect’ between people who are paying taxes and the people who aren’t. The task before each one of us is, to bring a change in the attitude of people. This task cannot be successfully achieved just via educational campaigns. After giving a lot of thought, I have come to a conclusion that, by making every earning individual pay taxes, automatically we can change the attitude of the nation. Before we look at the proposed actionable plan, let’s first understand, in terms of numbers, how income tax is being collected from earning individuals in India:

Income tax for financial year 2010-11	Rate (%)
Up to 1,60,000 Up to 1,90,000 (for women) Up to 2,40,000 (for resident individual of 65 years or above)	NIL
1,60,001 – 5,00,000	10
5,00,001 – 8,00,000	20
8,00,001 upwards	30

As per the current rules, any individual earning less than Rs.1,60,000 annually need not pay taxes. A small tweaking to the above tax system can dramatically change the attitude of people. Not taxing the individuals who earn less than Rs. 1,60,000 (1,90,000 and 2,40,000 for women and senior citizens respectfully) definitely reduces the burden on low-earning citizens. However, it is also resulting in lack-of-responsibility among majority of people. Keeping this in mind, I propose the following change in the tax system.

Proposed Income tax for future	Rate (%)
Up to 1,60,000 Up to 1,90,000 (for women) Up to 2,40,000 (for resident individual of 65 years or above)	1
1,60,001 – 5,00,000	10
5,00,001 – 8,00,000	20
8,00,001 upwards	30

The new proposed tax structure does one dramatic change. It makes sure that every citizen who is earning should pay tax to the nation. A nominal tax of 1% should be collected from every individual who is earning less than Rs. 1,60,000 (Rs. 1,90,000 and Rs. 2,40,000 for women and senior citizens respectfully). I do understand this is a burden on everyone, especially for the individuals who are struggling to meet their ends. But at the same time, this would be a critical move towards the progress of the nation.

Following are the advantages of making the tax mandatory

1. It brings a sense of responsibility among every citizen. It would automatically create an environment where people would protect the public property and protest against any wastage of money by government. Currently, this feeling is missing among 92% of the Indians. As long as they are not directly being affected, they don’t care about demanding accountability from government.

2. It will bring a sense of satisfaction among people that they have contributed towards development of the nation. This induces a feeling of demanding accountability from government and elected representatives. For every paisa collected via taxes, the government and elected representatives has to show the corresponding progress to the people. As they have directly paid an amount to the government in form of taxes, it inherently creates a feeling among citizens to ask for accountability and progress.

3. It will change the public service system in India. Public servants believe that they are being paid by Government and since 92% of the people haven’t directly contributed money to the government, they don’t hold public servants accountable. But with mandatory tax system, public servants are directly accountable to the people.

Also, there is one behavioral characteristic of Indians that needs to be changed. Generally, when people in India approach a politician, he/she always goes with folded hands, as if, they are begging for a favor from the politician. We need to change this mentality. A politician is doing a job and as a citizen of India, you have every right to demand. The part of the problem is, because majority of people in India haven’t contributed taxes, when they ask for a particular thing (ex: relief fund) from a politician, they think they are asking for a favor. This mindset would automatically change when there is a mandatory tax system in India. Given that, everyone has financially contributed, people would demand efficient use of funds and approach politicians with self-respect.

I wish to see a lady from a village walking up to Rahul Gandhi and saying ‘…I give a damn about whether you sleep at a hut for a night or not. I want my village to have better drainage systems, zero electricity cuts and proper roads. Can you get it done within a year? If not, you better not visit this place again’. And that courage would only come, when all of us pay taxes to the nation, irrespective of how much we earn.