- The syndrome of fulsome taxpayer-friendliness needs a relook!

The syndrome of fulsome taxpayer-friendliness needs a relook!

By Shiva Kant Jha

YOU have spoken nice pet ideas about so-called taxpayer-friendliness. You would surely receive appreciation in the media. But I, as a citizen, find them flawed. Please read what Mahatma Gandhi had said ( as displayed in Gandhi Smriti, Birla House, New Delhi):

“I will give you a talisman. Whenever you are in doubt or when the self becomes too much with you, apply the following test:

Recall the face of the poorest and weakest man whom you have seen and ask yourself if the step you contemplate is going to be of any use to him. Will he gain anything by it? Will it restore him to control over his own life and destiny? In other words, will it lead to Swaraj for the hungry and spiritually starving millions? Then you will find your doubts and yourself melting away.”

And then ask yourself : Is it fair and just to show indulgence at the cost of the millions of the suffering souls of the country. When you come to Bihar please travel by road from Patna to Darbhanga. Every second man's face would be the face to which Gandhiji refers. This talisman would help you steer your course through the dense fog whether it is the matter of taxation, or of the WTO. One instance of how the government works I had taken to the Delhi High Court on a PIL . Please read the judgment of the Delhi High Court in Shiva Kant Jha Vs Union Of India 256 I.T.R 563 . The Court went to the extent of stating:

“ We would however like to make an observation that the Central Government will be well advised to consider the questions raised by Shri Shiva Kant Jha who has done a noble job in bringing into focus as to how the Govt. of India had been losing crores and crores of rupees by allowing opaque system to operate.”

It is no joy for a citizen to see his government sailing with a tax haven adopting as its own the pleas advanced by the tax haven's counsel indifferent to the values without which no democratic government is worth its salt. The Government went on appeal to the Supreme Court. I told the High Court that in fact I represented the revenue; and I was at a loss to understand whose interests the Government wanted to protect. Whatever be the decision of the Supreme Court (which reserved its judgment on Feb. 26, 2003) the Government of this Republic must ponder over what happened. That case was a biopsy on the tax administration at work. But what came out therein is just one fifth of the iceberg. If you look into the whole of this part, I am sure, with your courage and imagination, you would be able to measure the whole of the iceberg. That would help you to do what you can to save the ship of our motherland from the doom of the Titanic.

Over years the Income-tax Department has lost both will and skill without which investigation can not be conducted. Your ideas would depress them further. Already we have reached a state when, not to say of the mighty multinationals, even glittering grocers' shops of the so-called economic metropolis succeed in derailing the tax administration even by dropping name those on the Olympus. Revenues when due must be collected per law. And law must be enforced with full vigour. Ulterior purpose is illegitimate as it amounts to mala fides. The authorities under the Income-tax Act are the creatures of the statute with fully defined functions, and wholly articulate purpose. They are, in effect, members of a statutory civil service playing prescribed roles within statutory structure. Here they differ from the members of the IAS though no Revenue Secretary ever recognizes it. It is their duty to collect taxes not a paisa less, not a paisa more. There is no scope for friendship inter se the tax gatherers and taxpayers. We must remember what the highest court of England said in Collco Dealings LTD v. IRC [1961] 1 All E R 762 at 765, per Viscount Simonds in the context of a Double Taxation Avoidance Agreement:

“But I would answer that neither comity nor rule of international law can be invoked to prevent a sovereign state from taking steps to protect its own revenue laws from gross abuse or save its own citizens from unjust discrimination in favour of foreigners.”

To trust the taxpayers is good; but it is public duty to keep them under effective scrutiny. In my considered view the tax gatherers have become more friendly with the taxpayers than what their statutory role permits. While considering the high pressure (and even crypto-psychic persuasion) lobbying for friendliness let us not harbour illusions born of design or ignorance. Let us not forget what Freud said:

“There is something to be said, however, in criticism of this disappointment. Strictly speaking it is not justified, for it consists in the destruction of an illusion. We welcome illusions because they spare usunpleasurable feelings, and enable us to enjoy satisfaction instead. We must not complain, then, if now and again they come into collusion with some portion of reality, and are shattered against it.”

When the persuaders and lobbyists, howsoever decorated with credentials, try to convince you, please remember Gandhi's talisman which even Granville Austin quoted at the very threshold of his book ( Working of a Democratic Constitution, Oxford,1999) which you must have gone through. If you do not read the tomes of the World Bank, IMF and the pleadings, with concealed sinister premises by most of your experts, no harm would be caused, but never stop reading history. The history of the deeds of the crooks and knaves would show that they script their plot in the same way. Read how Clive promoted “sponsored” Indian state controlled but not administered. How the comprador bourgeois sold through cryptic maneuverings the Nawabi to the East India Company. The history of that time would show how the foreign companies demanded (and got) more and more tax exemptions, more and more lowering of tariff barriers. Be careful while evaluating what our Mir Jaffars say as we have already seen enough of England's “White Man's Burden”, France's “Civilizing Mission”, and Germany's Kultur. We have numerous examples of the sovereign governments selling themselves.. H.G. Wells writes at p. 226 of his A Short History of the World (Penguin Books) that Louis XIV made bribery a state method almost more important than warfare, and Charles II of England was in his pay, and so were most of the Polish nobility, presently to be described.”

The modern geo-political realities should not be evaded. The Memoirs of Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay is still worth reading. There are reasons to believe that, whatever be their status in public international law, many governments are conducting themselves as if they are commercial wares on the selling counters of market covert of the present-day global market whose shockingly perilous manifesto can be best subsumed in the graphic and suggestive words of a film song: yahan har cheej bikti hai : to say this in learned language, on this counter vices and virtues are all res commercium. Often our intellectual hubris blocks our mind. We should keep in our mind what Pandit Nehru wrote in Glimpses of World History about President Wilson, Lloyed George, and Clemenceau assembled to frame the Treaty of Versailles: “…. And to these three men fell the great task of moulding the world afresh and healing its terrible wounds. It was a task worthy of supermen, demigods; and these three men were very far from being either. Men in authority _ kings, statesmen, generals, and the like _ are advertised and boomed up so much by the Press and otherwise that they often appear as giants of thought and action to the common people. A kind of halo seems to surround them, and in our ignorance we attribute to them many qualities which they are far from possessing. But on closer acquaintance they turn out to be very ordinary persons. A famous Austrian statesman once said that the world would be astounded if it knew with what little intelligence it is ruled. So these three, the “Big Three”, big as they seemed, were singularly limited in outlook and ignorant of international affairs, ignorant even of geography!”

This reading is cathartic. J Bronowski has aptly said in his Ascent of Man:

“ There are many gifts that are unique in man; but at the centre of them all, the root from which all knowledge grows, lies the ability to draw conclusions from what we see to what we do not see, to move our minds through space and time, and to recognize ourselves in the past on the steps of the present.”

I would pray to consider from the observation-post of the common people what this abracadabra about economic fundamentals means. Under our tradition we have attached greatest importance to intuitive understanding. This so as truth is never a casualty when intuitively understood. Statistics and logic are most often fudged; (and that too by those who do public duty and hold power on trust). Please think about the composition of our waxing foreign reserve and ask yourself: how made? For whom? To what purpose? While deriving joy from the waxing foreign exchange reserve just recall Gandhi's talisman. History has put on our government enormous responsibility in this phase of globalization.

It is quite evident there is a shocking mismatch between the national political structure and the global economic institutions with overarching impact, and no public accountability. This is a world where the rich are getting richer in substantially opaque system of global economic exploitation of the poor. Unless corrected the national governments are fast being driven to a point where it would cease to exist for public good. And we all know that we reap consequences, not miracles. Thomas Balogh rightly pointed out in 'The Irrelevance of Conventional Economics' : “The modern history of economic theory is a tale of the evasions of reality”. But will you like to hear it from a mere citizen? I hope so; though I cannot forget what Prof Galbraith said in his A Short History of Economics ( at p. 236}:

“Here another constant in economic life: as between grave ultimate disaster and conserving reforms that might avoid it, the former is frequently much preferred”

I am sorry to say that this constant is at work in our country; and those who know it are silent foreboding ill for our motherland. - Links on Shivakantjha - Links on Shivakantjha

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