Taxes Ahead

So far as my understanding of the situation and of the minds of men in positions of authority goes, I see that unless Communist China takes the offensive and attacks India again, there is no question of any hostile operations by way of retrieving our positions in the border. The Chinese have de facto imposed their will and pleasure on us and the Prime Minister has resolved to accept it, whatever hot and patriotic words may be uttered or may issue out of the External Affairs office.

     The powers taken under Emergency provisions will, however, continue to be exercised, because defence merges in internal development according to totalitarian practice. ‘Integration’ and ‘rationalization’ are convenient terms coming very handy for use by Authority when people have to be put under spell for acceptance of fresh burdens without murmur. The only question before Parliament and the country from now onwards is: how much more of taxation is to be imposed, plain and direct, concealed, indirect, and of every other variety? The gigantic proportions to which government expenditure will now run is hardly realized by people mouthing loyalty and obedience to the present regime.

“The Union Finance Minister has been omitting no opportunity of preparing the country for a stiff dose of additional taxation. He has been asking the people to be prepared for sacrifices involved in securing the twin objects of going ahead with the Third Plan projects and of strengthening the country’s defences. Meantime, the Finance Ministers of the States have not been inactive. They have appealed to the people to prepare for fresh taxation at State levels.”

     These words in the Fortnightly Report issued by Sri S. Narayanaswamy of Chitra & Company (Stock-brokers) describe in moderate terms the plight of the tax-payers of the country.

     Who are the tax-payers of the country? Not those only who comply with the demands of revenue authorities, but every one who earns a wage in the public or private sector, and every one who buys anything anywhere; and not only these, but every handicapped person who lives on the compassion of those around him. The effect of the old and new burdens by way of taxation impinges on all these who will have to give more and get less at every stage. They may not see the tax-collector in person but all the same, the tax collector’s squeezing operations will reach them most effectively. We have to be ready for an era of being bled white.

     Whether this operation is ultimately good for the nation is another matter. There is always a stage at which we reach the point of no return. But the Government will get any technical advice it wishes to obtain. There is nothing so flexible as expert opinion—all the time appearing as inflexible truth. As far as Chitra Narayanaswamy is concerned, he has said his say in very moderate language: “It would be indiscreet for the Union Finance Minister to take an indefinite taxable capacity of the people for granted.” After setting out details of the present burdens, in order to make the picture more accurate than what “Delhi-oriented” economists may paint, Chitra Narayanaswamy could not help exclaiming in words of studied moderation: “Heaping new coals on people’s heads even in the name of Emergency will dishearten the people at large”. What should not be forgotten is that the incentive for production must be maintained if we want the nation to work without the use of the slave-driver’s lash. As for strengthening the defence of the country, let us remember that equipments and armaments apart, the ultimate defence of a country is in the mental and moral vigour of the people. And if this mental and moral vigour is sapped, not all the purchases of military hardware made for cash or credit will avail. Tax burdens, prices, and wages have a great part to play in keeping or sapping mental and moral vigour. Taxation is not mere arithmetic nor is defence just armament strength; both form part of the science and art of governing men.

     People are warned and asked to be prepared for things which they are in a position to do but have not the willingness for it. There is no sense in journalists and ministers asking people to be ‘prepared’ for additional heavy taxation. The capacity to bear has already been exploited fully. There is no room for further ‘preparation’! What is meant is probably that people should not spend their animal energy in being surprised or shocked.

     It is worth repeating and repeating that all taxes, on whomsoever nominally placed by law, impinge on the wage-earners and consumers down below. Like water, taxes, direct as well as indirect, Central as well as State-levied, open or concealed, all find the bottom level and oppress the poor. All taxes take the shape of reduced earnings or increased prices, where they are not actually paid as taxes. Taxes go into cost, and cost goes into price. Taxes reduce dividends, and reduction in dividends increases the price of money. Increase in cost and reduction in dividends must reduce wages. And if this is not permitted, works must get shut down. Finally, the same wage buys less of what the worker wants.

     “Something may happen some day, I don’t know what” is not the mentality that should guide a ruler of 450 millions, most of whom helplessly hang on Government for everything. Right or wrong, those on whom responsibility rests should know their minds and fairly guess what will next happen, after each step: elementary, but more important than most things.

     Realizing the danger ahead for people as well as for Government, a danger really greater than any fresh external aggressive action, a new vision must be brought to bear on the situation for meeting it with wisdom and courage and humility.