TaxTricks presents VhatATax!

As the deadline for implementation of VAT (Value Added Tax) draws close, a glance at the morning paper Business section features articles about one state or the other planning to drop out from implementing the dreaded tax. The justification given for this is that there are a lot of complexities involved in implementing the tax, the neighbouring state may not implement it, the states will loose autonomy and tax revenue etc. et. al. At surface level this looks like perfectly reasonable concerns; but if one were to scratch the surface and add facts that one comes across in the same papers, one realises the harsh realities and the extent of rotting in the very fabric of what we call a democratic existence:

After the introduction of service tax (Servicing the Government’s coffers tax!), one has seen that this particular tax has seen dramatic increase in collections and has become the most important and largest source of revenue for the Government. The fact remains that the collection of sales tax has shown stagnant to marginal increase for more than a decade. What is the reason for this? Is it because for some mysterious reason the sales of goods has remained the same or has registered abysmally low increase?

Forget complex economic jargons or justifications (loads of this can be heard on TV emitting from the mouths of the very rarely well educated, English speaking politicians), one can logically deduce that if the service tax collections have been increase at a dramatic pace (Even after negating the constant expansion in the list of service providers and constant increase in the rate of tax from 5% to 10%) then there has to be a average to good increase in sales tax at least on account of the service providers (Forgetting the exploding increase in the population and hence consumers in the same decade) Why is this not happening?

The simple fact is that the segment which is supposed to be in the sales tax paying community in collusion with the sales tax “collection officials” have contributed to the building of possibly the largest parallel economy in the world!

The people who are supposed to be paying the tax don’t want to pay the tax, the tax collection authorities have to bid and pay their political masters for their plump posts and hence have to first recover the investments and then they have to worry about their ROI, they land up aiding the tax evading community, and this cushy and symbiotically existing relation is also being aided and protected by the complex and archaic tax laws and legal loopholes.

Like Neo when in Matrix when he sees the world for the computer generated play it is, one begins to see the rot and corruption: Top to bottom, Bottom to top whichever way you look at it, whichever any plane or angle you look at it from, all you see is ROT! (One can even produce a movie on the Indian tax system on the lines of the Matrix and call it Tax-Tricks!) Similar to the Matrix, out comes a miracle cure for the rot called VAT (Whether it was introduced by Martians from outer space who hypnotised some “tax reforms” officials is still being debated!) which will force the tax-evading community to compulsorily maintain books of sales (They stand to loose input credit if they don’t maintain records) and hence exorcising them into honest sales tax payers and since all these records will be maintained, the other blood sucking leeches called Income tax officials can have a field day with them (More on them in another post!) and since are at least honest sales tax payers (Out of compulsion than choice), they need not pay the sales tax “collection officials”, who now cannot pay their politico masters! Blasphemy! Now what do they do?! Harp about “insurmountable implementation complexities” (Where will we make the moolah now?); create the “chicken and egg” situation by complaining that the neighbours may not be implementing VAT on time, complain about protests from the “business communities” (The Fungi requires the Lichen for symbiosis to survive) etc.

What will ultimately happen will have to be seen as of now, the fear and desperation levels among the Sales Tax “Collection Authorities” has reached such astronomical proportions to salvage whatever can be “Collected” is that today they are even stopping individuals who might be ferrying that hard earned microwave or stereo home from the store to their homes and asking for proof of purchase! So be wary before travelling on your bikes or cars without a proof of purchase for that new CD or tape or something new, lest you get caught by the Sales “Tax Collection” authorities!