Too taxing a Budget
Too taxing a Budget
This refers to the Budget FY16 report “Win some, lose some” (March 1). Service tax has been increased to 14% from the earlier 12% plus education cess. The Budget also has an enabling provision to levy a 2% Swachh Bharat cess on certain taxable services. This will result in inflation across the board. What is beyond logic is the luxury tax on the hotels. A budget traveller stays in a hotel just to sleep and take bath,and take food if required. Is lodging, a basic necessity, to be treated as luxury? There should have been some thought given to luxury tax on hotels, which no Budget thinks fit to do. The Budget has given the logic that the increase in service tax is required to boost infrastructure spending. When a new flyover or metro/mono rail services is provided to a certain area in a city, the new infrastructure works both as a boon and also a bane for residents of that area, and perhaps for them only. The municipal corporation increases property tax on buildings close to the new infrastructure facility. Is it the fault of the residents that they live close to the new infrastructure facility? It is a double whammy—the citizen pays more service tax and also a higher circle rate (in the case of Delhi). On top of it, real estate prices go up in that area. Not only this, when the government announces a new rail or road link or a new airport in a certain area, builders jack up the prices of the existing and the under-construction projects and the advertisements say that the residential complex will be close to the this or that infrastructure project. This has been observed in the case of the Sewri-Navi Mumbai trans-harbour link project, with property prices in the far-flung areas like Ulwe shooting up beyond what the common man can afford. There have also been media reports that builders lobby to have infrastructure projects in certain areas, to jack up the real estate prices. The tax-payers are paying the ultimate price. Just building toilets will not result in Swachh Bharat. What is needed is maintenance of toilets, and most important, access to water. The maintenance of toilets seems to be overlooked. Interest of the people in Swachh Bharat campaign may experience the law of diminishing returns with the forthcoming Swachh cess in services.
Deendayal Lulla, Mumbai
Back to black
Apropos of your edit “Black is back”, let us assume that the taxman routinely abuses his powers and is not to be trusted with more. But what about the CXOs and company boards who fraudlently channel money off-shores and then bring it back through propped up foreign investment agents to launder the same in India and get returns of that money and keep fuelling a black money cycle? There should be the strictest punishment for such economic crimes.
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