Newer taxes…


Its taxation without representation, scream the opposition and the media. The three presidential ordinances that empowered the government to, amongst other things, impose a 15 per cent surcharge on income tax are not going to go down well with anyone. True, all ordinances have to be ratified by the parliament within 120 days. But that just happens to be the timeframe of the surcharge in the first place. The opposition can rail against the spirit of the whole exercise, not its legality.

In total, the measures, which also include a 1.5 per cent surcharge on excise duty and 2 per cent surcharge on electricity units, will yield Rs120 billion. Was the government playing nice, promulgating ordinances instead of passing bills through parliament? No. Is penalising the demographic that does pay tax, as opposed to expanding the tax base, a just move? Of course not. The irony here, however, is that many in the government, including the higher ranking financial mandarins, also disapprove of such measures. But the government really has been left no choice. The government did not, its spokespersons claim, want to impose any new tax. All it wanted to do was to reform (not raise the rate of) an older tax; the GST, to be specific. A reformed GST and the rebate carrots that it would entail would build up the tax database and finally initiate a crackdown on tax defaulters. But rather than supporting the government on the issue, the opposition and (most of) coalition parties alike would have none of it. In addition, they are not even letting the government save any money either, insisting on continuation of the unsustainable subsidy the government is giving on electricity units. Theyre not letting the government translate price fluctuations in the international oil market to the consumers either. All in the face of a burgeoning fiscal deficit.

True, the opposition can make the obvious references to the (original) tea party in the colonial US. But they should also realise that they have limited the space for parliamentary consensus. If democracy cannot thrive without a vigilant opposition, it cannot survive with an unforgiving, intransigent and needlessly populist one either.