We are taxed right from birth and add inflation to it – makes a double whammy !!

Hi : The other day I ordered a drink. It was my favourite Teachers Highland whisky. A 60 ml one. The price read in Happy Hours as Rs. 350 per 60 ml. Means I will get two drinks for the same price. An addicted person that I am, I ordered a repeat while watching the India – Australia match on the LED screen of the bar.  When the bill came, it was close to Rs.1075. Of course I ordered a soda also and some ice. But how come the bill increased by almost 25% ? One soda will not cost that much. Nor will ice, as I know it for a fact that bars don’t charge for ice. The peanuts they gave were also complimentary. Then what was it ?  These are the latent costs.

Same with airlines tickets. The airport tax, aviation fuel tax, the surcharge, the CESS all are more than the price actually paid to the airlines.  Apparently government in India has found ingenuous ways to take money out of our pockets. Today I heard that if you go by road from Delhi to Amritsar you have to pass through 14 toll plazas. There is no plaza on the roads,  but in order to drive on the potholed roads you have to pay Rs.20 per toll i.e. close to Rs. 300 as toll charges. The money is taken in cash by a hand which emanates from a rickety figure, half hidden behind a shady booth with broken glass panes.  The tolls are privatised and every year Government auctions it to the highest bidder willing to collect money.

Add inflation to the taxes and government has made a cross word which no one can solve.

On taxes, there is a value added tax which is added to a service tax. Apparently anything adding value is liable for taxation.  This partly explains why Government does not add any value to our lives.  Then there is a surcharge which is the extra charge that you pay for having paid the first charge. Something like a tax on tax. If you can afford to pay the first charge, you can pay the second one as well.

Taxes, taxes and taxes. Entertainment tax is the funniest. You are being taxed because you are getting entertained. Sometimes it is double taxation as the paid entertainment also may be taxing. Road Tax, Toll tax, municipal tax, land registry tax, Tax deductible at source, Fringe benefit taxes ( again another funny one) and many more made by the state governments in order to ensure that middle class – whether salaries or self employed, remain impoverished.

Now add inflation to it. A fixed deposit gives 9% returns. The returns are taxable. On top there is a 7% inflation. Even if you keep your money intact at the end of the year, that is a great achievement. Everyone tells you to invest in equity to beat the inflation. Problem is the moment you do it those scrips make a free fall, making your heart beat faster.  The other option is mutual bunds. Here capital gains get tax get applicable. Still if you want some returns without taking much headache, mutual fund is the only way to beat the inflation. The risk still remains.

If you had the misfortune to be born in the democracy like India then you are taxed right at your birth. Much before you start earning. This is the tax of democracy. Probably the concept of TDS emanated from this.  The cost of a general election is estimated to be around Rs. 10,000 crores. This does not include the hidden costs of scams some of which are legal like Spectrumgate and coalgate and innumerable others are under-the – table.  On top  there are subsidies, fertilizer subsidy, food subsidy, LPG subsidy – these are open bribes to buy votes.  One does not realise that it is the same exchequer which is funding all these. In order to sustain they tax and on the other hand inflation rises due to bad governance around the world.

We end up paying more, in our democracy, than we had bargained for. This is a double whammy !



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