Budget 2015 - essential goods and services must be exempted from taxes for poor people and subsidies must be only for poor people.

[CA DEV KUMAR KOTHARI]

The budget 2015 has given benefit for poor people by way of common pools and not directly. Any person whether poor or rich has to pay taxes similarly for many essential items for consumption or services. This is not justified.

Taxes must be according to capacity to pay:

The well-known cannon of taxation is that tax must be according to capacity to pay. Therefore, there must be some regard   and relaxation for essential goods and services.

Some common items becoming costlier or cheaper for common and other people.

Bhojan and essentials for living -commonly known Roti, kapra aur makan:

Essential goods and services are equally important for poor and rich. Therefore, there must be some regard for poor people.

The quantity and quality are important factors. A poor man consumes many items in lesser quantity and of lower price. However some  items of consumption and services are priced similarly for poor and rich all.

There can be differentiation by way of exemption up to certain limit. For example telephones and mobile phones are now essential even for poor self-employed persons /  workman like badhai -carpenter,  raj mistry- masson , drivers , electrician, temporary cooks, maids, nurses etc.

So there must be exemption for them or up to certain limit for all.

A rich person may pay higher amount  for mobile phone and internet services because he us using not merely personal essential service but also for large business and   leisure etc. However, for working people these are now essential so they must get some exemption.

The following is an illustrative list of items becoming costlier or cheaper ( without quantum), The author has expressed his views in right column of the table:

Budget affecting costs due to increased or reduced levies	Views of author
Costlier - you will have to pay more for
Smoking and consumption of other tobacco items will be more expensive,	Good for society as a whole - for better health and environment.  Less use of tobacco for smoking will reduce carbon emission also. However, considering that tobacco is an essential item for many poor people also,- they  must get some concession.
All services becoming costlier	For poor people there must be some exemption on essential services. For example telephone , mobile phone, internet bill up to ₹ 300/- per month can be exempted. Similar concessions must be  be given for other items of essential nature.
Completely built imported commercial vehicles.
Cement	For affordable housing some concession must be given - area wise or for first time small house at least.
Aerated, flavoured drinks and packaged water	Packaged water must be exempted, it is essential. On many railway stations, bus stops  we do not find good quality water for drinking. Aerated, flavoured drinks can be made more costlier- they are nor essential and are also not good for health.
Plastic bags and sacks	Can be made more costlier so that we re-develop habit of carrying cloth bag for shopping.
Business and executive class air travel	I believe a major part is on account of government and senior executives so it can be borne without difficulty.
Visit to amusement and theme park	Must be exempted as a means for relaxation and picnic. Exemption can be provided for trips to such places by school.
Music concerts	There must be exemption for low cost  low profile concerts.
Liquor, chit fund and lottery	These must be loaded with more taxes so that the cost can be prohibitive.
Cheaper - you will have to pay less for:
Leather footwear priced above ₹ 1,000 per pair	The exemption must be restricted up to MRP of ₹ 1500/-  or 2000/-  per pair. Above that, must bear more taxes as they are more for brands and fashion and not as essential item.
Locally made mobile phones, LED/LCD panels, LED lights and LED Lamps	The government authorities must also take care to see that quality of such goods improves and one has to be satisfied with made in India product,  of “top class quality good”.
Solar Water heater
Pacemakers	Mal practices in medical services to implant pacemakers even when not necessary msut be curbed.
Ambulance	Not only chassis, other parts of ambulance must also be made cheaper.
Ambulance services	It is an essential services - must get full exemption.
Computer tablets
Agarbattis	Agarbattis are made of artificial scents and are not good for health. They  pollute environment. So only small size of agarbatti should get exemption. Smoke of  dhoop, dhoop batti  is also not good for enviornment. The smoke is smoke it causes carbon , gas and heat emission.
Microwave ovens	Not affecting poor people.
Refrigerator compressors	Not affecting poor people.
Peanut butter, packaged fruits and vegetables	Essentials like vegetables must be fully exempted.
Visit to museum, zoo and national park	Must be exempted fully  from all levies by any government.

Subsidies must be for poor people only:

In paragraph 28 of the Budget Speech honoralbe Finance Minister has appealed for voluntary forgoing of subsidy on LPG cylinders. The paragraph reads as follows:

28.       We have embarked on that path.  The direct transfer of benefits, started mostly in scholarship schemes, will be further expanded with a view to increasing the number of beneficiaries from the present 1 crore to 10.3 crore.  Similarly, ₹ 6,335 crore have so far been transferred directly, as LPG subsidy to 11.5 crore LPG consumers.  I am sure, persons who are better-off, such as those in the top tax bracket, and those genuinely concerned for the welfare of the poor, such as members of this House, will give up their LPG subsidy voluntarily.

In my two articles webhosted on this website I had already mentioned for such voluntary disclaimer of subsidy on LPG cylinders. As soon as I became aware of disclaimer option for subsidy I requested , my wife  CA Uma Kothari and my daughter Dr. Shweta Kothari -Singla, (both are subscribers for  LPG cylinder in their names) and both  have disclaimed subsidy in their subscribers accounts. In my articles, I have appealed to readers who are professionals and well to do and can forgo subsidy.  I spoke to some other professionals and executive, but I found response not very encouraging.

Therefore, it is very difficult to have voluntary disclaimer of subsidy. As suggested by me in my articles the disentitlement must be compulsory for people living in Pucca houses (a standard can be prescribed) and those having income above certain limit.

Let us hope that appeal of honorable FM is considered and our MP’s disclaim voluntarily subsidy on LPG cylinders. As per my feeling even servants working in pucca houses must not be entitled for such subsidy because the cooking fuel is provided by the employer.

It is unfortunate that many rich people are still having ration cards in name of family members and family members of servants and ex-servants and are misusing subsidy. There is no hope for voluntary disclaimer, even by many sitting in the Parliament.

The honorable FM can collect information about disclaimed subsidy by members and announce the same in Parliament, perhaps that will set example for others.

In search on web, author could not find information or statistics about people/ subscribers who have disclaimed subsidy on LPG cylinders. 

Author  hope that  most of readers of this website can waive subsidy hence once again request readers of this website to disclaim subsidy on LPG cylinders.