It wasn’t about paying more in taxes. It wasn’t about not getting more opportunities for tax-free investments. It wasn’t also about the crores of rupees of taxpayers’ money being wasted in the name of rural uplift. The dejection with Budget 2007 was for reasons far deeper. The document did not belong to 2007. The subtext of the speech that P. Chidambaram read out at 11 a.m. on 28 February was that the government remains the ultimate mai-baap. Its vision, if there was one, was of an all-embracing, over-centralised state which is now entertained only by the last adherents of the flat earth society. It was a sad reminder that an inefficient state with warped priorities still believes that everything—from running Ashok Hotel to determining economic priorities—comes under its purview and only the government can rescue the country from poverty and into righteous prosperity. This was the philosophy of budgets for a good 40 years, up to the early 1990s. What turned the sadness into shock was the fact that this philosophy was revisited by the same finance minister who, in the past, had said that punitive taxation is out and the Laffer Curve is in; that honest taxpayers will be rewarded with lower rates and that outcomes from public spending must match outlays.
We realise that the finance minister is a politician too. So it’s all right if he allocated crores of rupees for schemes that do little more than provide business opportunities for billboard painters. But instead of funding them through higher taxes (e.g. education cess, dividend distribution tax) he could have been imaginative and generated nearly Rs 28,000 crore from taxes few would have objected to (see page 54). He could have been a bit courageous too and lifted the exemption on agricultural income to raise Rs 4,000 crore more. But then, he may not have remained the finance minister and Manmohan Singh would have called in the packers. Social equity in India means that a clerk earning Rs 15,000 a month must pay income tax but a strawberry farmer netting Rs 2 lakh a month should enjoy tax-free status.
The budget hasn’t done much to make us richer and the stock markets aren’t likely to be generous in wealth creation for a few months. That makes it all the more important to understand exactly what and why you pay in taxes and what to do with your savings. Our cover package will assist you getting started and stay rich—despite the budget.
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