NEW DELHI: Finance minister Arun Jaitley’s reference to the mismatch between rising car sales, large number of Indians travelling abroad and the paltry total of high income taxpayers was crafted to boost public support for digitalisation and a wider tax net.
The statistics marshalled by the finance minister were intended to shock public opinion into recognising the extent of tax evasion and generate popular support among the poor and the taxpayers for tough measures to track tax liabilities. Sources said the numbers were meant to enhance the justification for digitalisation that is seen as a measure to capture consumption and enlarge the formal economy and a beneficial fallout of demonetisation.
The political reasoning is to make sure that “honest” taxpayers appreciate that tax dodgers are being pursued and a small section is not being made to shoulder the burden of contributing to the revenues of the government. In discussions within the government, PM Narendra Modi is understood to have been convinced that carrots alone would not ensure more tax compliance and that incentives as well as disincentives were needed to promote non-cash transactions and curb black money generation.
In his speech, Jaitley had said, “Of the 76 lakh individual assesses who declare income above Rs 5 lakh, 56 lakh are in the salaried class. The number of people showing income more than Rs 50 lakh in the entire country is only 1.72 lakh. We can contrast this with the fact that in the last five years, more than 1.25 crore cars have been sold, and number of Indian citizens who flew abroad, either for business or tourism, is 2 crore in the year 2015.”
BJP sources said the feedback on the comparison was positive, raising hopes in party circles that the message had the intended effect of rallying public opinion for scrutiny of high value bank deposits that followed demonetisation.