Why we should pay taxes

THAT the Government has no right to take "my" money is a very libertarian view of taxation and one that is not uncommon in the United States. This notion is now taking root in India, coincidentally or not in an era in which each is for him/herself and few for the other.

There was so much fuss even about the two per cent surcharge on income tax that the Government imposed immediately after the Gujarat earthquake. There was no better example of how self- centred we have become than the complaints by the "honest" tax- payer about that surcharge, which for most ran into no more than a few hundred rupees.

This new attitude comes after a decade during which the maximum income tax rates have fallen substantially, taxes on dividend incomes have been removed, estate duty has been abolished and wealth tax remains nominal. The new resentment against even moderate taxes reflects the end of concern for the other. That concern never was there in full measure. But there at least used to be this feeling that we must pay what we have to because it is needed for a larger common good - and shame on the criminals who feast on a wealth built on avoiding taxes.

A recent article in Outlook magazine asked if there was any earthly reason why we should pay our taxes. The arguments were confusing/confused but if there were any there were two. One was that only a small number of those who are supposed to pay taxes do so, while the (wealthier) rest escape the tax net. The other was that the Government gives us very little in return for the taxes we pay. Both are very valid arguments. But one is about the Government turning a blind eye to tax evasion and the other about the lack of accountability in the State provision of basic services. These must make more vehement the demands for equality in enforcement of laws and greater accountability of the Government. But they do not make a case for zero taxes.

It is strange that one has to outline the two very obvious reasons why those of us who are liable to pay taxes must do so. First, we may earn our income with our own efforts but we are able to do so because we are members of a larger society. And there are common facilities and services that all members of this larger society share and make use of. These common services - be it roads or universities - are provided by the Government. In some sense much of "my" money that I do not want to part with has been made possible by these common facilities. If we do not pay taxes where will the Government get its money to provide these services? It is a sign of the times that more and more of those who can afford to do so want to opt out. If they are not using government services they see no reason why they should pay taxes. But even if they avoid using public health services, buy their own water and even send their children to schools abroad, where will they drive their flashy cars if not on public roads?

The second reason is equity. If all societies - ours in particular - are highly stratified in social and economic terms, those at the top will always have to contribute a larger sum to Government and social efforts to provide universal services. Of course, notions of "equity" and "redistribution," have begun to fray at the edges of public consciousness. But again, unless we want to permanently leave the country (as many of those who can are doing) or live in private and self-contained islands (as some are trying very hard to), there is no escape from even partially fulfilling our social responsibility of respecting equity.

The reasons for paying taxes do not mean that we should not be exercised about tax evasion or about corruption, indifference and the pathetically low quality of government services in everything from water supply to education. Or that taxation is sometimes used to cover waste and inefficiency. But such issues have to be fought separately, they do not provide the moral justification for not paying taxes.

C. RAMMANOHAR REDDY

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