Even though the BJP prime ministerial candidate has dropped the economic bomb putting forward the proposal of abolishing income tax, is it really that brilliant a fiscal idea? While it is true that our taxation system needs a comprehensive overhaul, abolishing income tax might just be the most ridiculous idea meant squarely to satisfy the rich and superrich. In fact, the complete infeasibility of the idea has been hinted at by discerning minds within the BJP camp, including Arun Jaitley, who has proffered the federal model of Indian polity to excuse Modi’s arguments. While abolition of income tax and replacing it with a bank transaction tax sound brilliant on paper and perhaps even ring the correct bell for the common man, the middle and the lower classes particularly, it is an invitation to absolutely clip the state power to invest in public infrastructure. Since income tax is one of the biggest sources of revenue generation for the governments, how will they monetarily sustain themselves is a matter of grave concern. In fact, this proposal would not just be a suicidal economic move, but it is one that will not be taken up by the epitomes of capitalist economies, the US and the European Union. Of course, we need to seriously reconfigure the slab system and minimize the strain on the middle and lower income groups, but to do away with this important source of state revenue would bring down the very edifice and premises of public spending for greater civic good.
Given that the crux of the problem is how the public revenue is being spent and the myriad ways in which it is pilfered from the government exchequer, the proposal of eliminating income tax will be yet another reason why the states will become exponentially unaccountable to the wider public. Since taxation and revenue generation is the state’s way of taking care of the poor and giving them the safety net of basic welfare and sustenance, the most affected by BJP’s proposal will be those below poverty line.
Given that the crux of the problem is how the public revenue is being spent and the myriad ways in which it is pilfered from the government exchequer, the proposal of eliminating income tax will be yet another reason why the states will become exponentially unaccountable to the wider public. Since taxation and revenue generation is the state’s way of taking care of the poor and giving them the safety net of basic welfare and sustenance, the most affected by BJP’s proposal will be those below poverty line.