The Middle-Class Path

THE SALARIED CLASS are the most dependable taxpayers because they don’t really have a choice. The money is directly de­ducted with every pay slip and any government should be thankful for such a stream of revenue where avoidance is minimum. And mostly, the middle-class person doesn’t even complain too much because that is just one of the many burdens a decent law-abiding citizen must live with. And, yet, every Budget is always one more affirmation of his own irrelevance because he is not a politi­cal entity, unlike, say, farmers, or busi­nesses that have associations to lobby for their interests. The sop reserved for the salaried is marginal reduction of the income tax but lately, you don’t even see that. This Budget might have something on that front because next year, elections are there and the government will want something on that line on its resumé. But it is not enough.

In developed countries, taxes are paid and in return, the salaried folk get a social security net. In India, the net is coming into being but it, more or less, misses the middle class entirely. You could argue India is a poor country and so the first priority will be for the neediest, the ones below the poverty line. But that still does not address the question of his interests. When it comes to tax, it is good to remember that this is money that belongs to the person who worked and earned it. He pays under threat of state coercion but still deserves just compensation.

What then should the government do? It could make the burden less. Reducing income taxes significantly is usually a good thing because the extra money is spent and returns back into circulation, fueling the economy. But the government can also be more responsible with the money it gets from them. The best way to do it is to reduce its own size. Social uplift is a leaky boat even if it is getting more efficient. And it is also a slippery slope that keeps expanding. The broadening of subsidies and freebies will only continue because of competition between political parties. Some are good and necessary, like spending on public healthcare; others, like loan waivers, are bad in both theory and practice.

One of the fallouts of more spend­ing on social welfare is that it increases the size of the government and that is its own addiction. Less is lean but all governments usually prefer obesity. The bureaucracy is to a large extent involved in self-perpetuation and that would be alright if it was not the taxpayers’ money funding it. Opti­mally, the government shouldn’t be a Robin Hood taking from the rich to give to the poor because a lot of it goes into the system that does this juggling. In this case, it is not even the rich but the salaried. Eventually, India will be a nation where the taxpayer will swing elections, but it is decades away. Until then, he can only hope.

Indian economyIndian middle classinflationmarkettax reliefUnion Budget 2023