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  • Category: Miscellaneous

    Expenses should be the basis for tax and categorisation

    For last many years I am thinking more strongly in favour of expense tax in place of Income Tax.
    To enjoy the benefits of income one has to spend the money. One can spend only what money he has or has to borrow and spend.

    It is always the lament and genuine complaint of the middle class, especially the salaried class, that they are the real sufferers of all kind of taxation and income rules. They have to pay tax to the last pie, but do not get any benefits from government as they are considered not-poor because each paisa of their income is well accounted. On the other hand they suffer in double as they are subjected to price rise because they are not insulated by concessions or free supplies.

    My thoughts were provoked latest by a recent site in Kerala. As a process of loosening tight lockdown, the liquor vending was started in Kerala a couple of days ago. Photos and video clips in social media showed miles long queues in all places and centres in front of liquor shops and people could be seen returning with many bottles of liquor. I believe that this crowd would include many hundreds who till the other day were declaring their suffering due to loss of income in lockdown and were availing the free kit and other concessional or free distribution of essentials. Any one knows that in comparison one day's rice usage in a family costs many times lesser than one day's quota of liquor for a man in the same family. There may be many in this liquor queue that otherwise will be having yellow or pink ration cards.

    So I have come to a belief that in our country we need to tax expenses and not income. People should be categorised as Rich, Poor or middle class, or subsidy requiring etc as per their expenses and not income.

    Let us debate on this.
  • #734334
    I agree with the author. There was a big debate on this point earlier once in our friend circle. The salaries are deposited in banks. Whatever money is withdrawn from the bank can be taken as expenses. That will be the easiest way for the employees. But how to measure the expenses of other people.
    Now many people bring cash and do purchases and there will not be any receipts or bills for these transactions. How to account for that? These details are to be worked out and the taxation methodology is to be made. Then there may not be much problem with black money.
    Already we are paying sales tax for all the purchases we made. Many shopkeepers don't want to give bills or receipts as that will add up to their turnover. But some people insist on receipts. Now the buyer also may not insist on a receipt so that amount will not be shown as their expenses.

    always confident

  • #734335
    Nice thread from the author and India tax system going to open a new format from the next week probably to address what the author was insisting. Middle class and the salaried class are the sincere tax payers and much of the country income comes from this sector. But what we get in return is nothing. The poor get the schemes and largess and the rich gets favors and other things and we are alone responsible for the nation building and no Finance Minister has ever thought about it. At least now good sense prevail and the salaried class be given some benefits otherwise the outrage in future can be seen.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #734339
    A nice thread bringing out the fundamentals of expense tax and its usefulness. The logic is very simple that more people spend, more tax the Govt collects. This will require bringing all the shopkeepers and vendors including hawkers in the tax collecting process which will be a herculean task but can be achieved if there is good governance in the system. Frankly speaking, GST is itself in the nature of expense tax only but small shopkeepers are outside its purview. Whatever system we follow our problem is the lack of good governance and strict laws and compliance. So, even after introducing expense tax we might find ourselves back to the same situation.
    Knowledge is power.

  • #734343
    I welcome the author's proposal to tax expenses. But it is a difficult job to account the expenses of a person. The author should suggest the methodology to ensure 100 percent accounting of expenses of an individual.
    No life without Sun

  • #734346
    Any new idea is welcome and worth discussion. Expenses should be the basis of tax instead of income is the proposed idea. As of now, we are paying income tax on the money earned. We are paying tax on the income generated through savings. Apart from this, we are paying GST on the purchases we make. So we are paying tax for earning, saving, and spending.
    It is better if it is explained how taxing based on expenditure will be better than taxing the earnings. How the expenditure of each and every individual is calculated? A handful of people buying liquor on unlocking the curfew does not mean anything. They are also paying taxes on the purchases they make. How taxation based on expenditure rather than the income earned will be better may be explained. Obviously, no one can spend more than what they earn.

    " Be Good and Do Good "

  • #734363
    The suggestion seems good but its implementation will be really complex. It would be a crucial factor to decide which expenditure will incur taxes and which ones should not. During some emergencies, one may have to spend a good amount not because of purchasing something rather as a compulsion. In that case, imposing a tax on those expenditures will neither be logical nor favourable. The tax structure has to be rationalised. Why everybody should pay tax even when they are not earning anything? Here I am talking about indirect taxes like GST, service tax, etc and everybody has to pay those even if the money they got is a gift. Everybody is paying these indirect taxes for the development of the country and should enjoy the benefit of it. But everybody is not getting the benefit and all-around development is not there.

    "Life is easier when you enjoy what you do"

  • #734364
    The Indian income tax structure has been prepared in such a way where most of the cases are included directly or indirectly as proposed by the author.
    1.There are a basic limit of earnings per year where no tax is payable by the people.
    2. There are deductible amount under various section denoted expenses cum savings under the specific head.
    3. There are various tax rates applicable for different amount after considering all deduction and rebate denoting different tax on different classes of people.
    4. After all what you are expended are also taxed in the form of sales tax, vat and GST.
    As a citizen it is also the duty of them to see that there are the sources of income of the government , otherwise how the various development activities will go on. Presently you are paying indirect tax on your expenses, if govt charged income tax on expenses again then there will be double tax in the form of direct and indirect tax. So there will be other problems regarding agitation of the common people and tax collection structure system of the govt.
    As far as drinking of alcohol is concern , no rules can prevent them until they themselves not quit the thing. They need moral education and I think not related under this threat.
    So the existing system of taxed in India are quit good and we can demand to get extra benefits regarding rebates or tax rate only.

    Believe in the existence of God the superpower.

  • #734418
    While proposing anything, it should be accompanied by solutions and suggestions. I sincerely wait for the author Venkiteswaran to bring out the measures for implementation that would make it a valid proposal.

    I would like to see Venkiteswaran back in this thread.

    No life without Sun

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