In the longer run, we should be moving towards a larger proportion of direct taxes. And, therefore, a reduction in indirect taxes is not the way to go either in the short term or in the long term.”
The Government of India (GoI) may consider incentivising the younger generation to get out of their comfort zones and become self-dependent, gradually becoming really independent citizens. Please remove any and all taxes levied on the youth of the country (citizens below a certain age) as may be decided by experts. I do not have access to data on total contribution to taxes segregated by age groups, nor is it available in the public domain, so I am not in a position to point out a specific age. For example, GoI may choose not to tax citizens below 30 (thirty) years of age, and instead shift this burden on citizens above 30 (thirty) years of age. [i choose 30 (thirty) years because I am older than that, so such a policy will not benefit me.
The GoI may choose to not put YUVA M.R.P. on hedonic goods clothes above a certain price, luxury cars, et cetera and harmful goods like cigarettes, alcohol, et cetera.
This transfer of direct tax burden may:
- Ensure that there is no loss to the exchequer due to this policy.
- Not burden older citizens because older people earn more than enough and may comfortably pay higher taxes. [the shifting of the tax burden will lure teenagers towards jobs and additionally leave their guardians with less money to push them into higher education. If one really wants higher education, education loans are always there.]
- Solve a deep-rooted evil. I feel citizens should learn, earn and return. It may be in a different order or even simultaneously. In the present education system, where students continue to “learn” until they have spent their energy-filled youth sitting in air-conditioned rooms, before a laptop. This leads to the formation of swayed personalities, opinions based on media and attention span of a goldfish among others. For example, highly educated students are learning on their amoled screen devices about which gender shall tip the waiter, without learning to smile at the waiter serving them the food, while not caring to wish a teacher passing by.
Comparatively, in a workplace scenario, a boss may be a better teacher to teach them some manners. The evils of an empty mind are numerous and very difficult to abandon later in life, even after realisation of truth(current anti-government protests being one of them). Then they “earn” lavishly, so they spend lavishly and mostly on self without caring for any and all because their body is their only identity. Although they do care and invest in their offsprings, only to create more self-absorbed ones, with empty minds and a whole lot of spare time. So a change in the tax policy may serve as an incentive towards the correct path until the education system is reset for good. There is no “return” yet.
Additionally, according to a comment by Shri Suresh Seshadri published in The Hindu today “Overall personal income taxes account for less than 2.5% of the GDP. So even if you make a small reduction in that, it’s really not going to have any significant impact on the slowdown. In the longer term, however, I think we are in an economy in which we have a tax structure that is too heavily weighted in favour of indirect taxes as well as a low tax-to-GDP ratio. So, in the longer run, we should be moving towards a larger proportion of direct taxes. And, therefore, a reduction in indirect taxes is not the way to go either in the short term or in the long term.”
With the above report, it can be deduced that firstly increasing direct taxes is the right way to go and secondly, the policy will have insignificant effect on treasury/GDP. But then again, the GoI is lead by politicians who care about vote banks and anti-government protests. So, totally removing the direct taxes of young citizens while increasing the direct taxes of older citizens simultaneously may also solve the problem of the vote bank. Those elders who whine, let them be. They will anyway find other ways to whine if not this. Old people are always opposed to change. [fact: young India will decide the 2024]
Coming to indirect taxes, the young citizens may use their AADHAAR cards to validate their age group and buy goods at lower prices form shops/restaurants with new YUVA M.R.P. printed on goods alongside the usual M.R.P print. Even if they choose to buy goods and then sell it to elder citizens, the arbitrage will only lead to the transfer of money from old to young, which is a good thing.
Firstly, we have huge arbitrage in imports/ exports/forex which is bleeding the nation’s economy but we do not care, so this too may be allowed to fly in larger interests of the society. Of course, the GoI may choose to not put YUVA M.R.P. on hedonic goods clothes above a certain price, luxury cars, et cetera and harmful goods like cigarettes, alcohol, et cetera.
Secondly, Why not? The party in power has bold numbers. Please use these time-limited numbers boldly. A gentle reminder here: [fact: young India will decide the 2024].
1. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.