The image of the Indian taxman took further beating this week when 50 young officers of the Indian Revenue Service recommended massive tax hikes as a way out of Covid-battered economy.
The ‘dreaded’ IRS was back. And so was India’s pushback against it.
From jokes on the officers of the premier service to more nuanced criticisms of the idea of taxation as a solution to all economic woes – IRS received brickbats from all quarters.
For a whole day after the report was made public, #IRSJokes trended on Twitter. And if the vilification was not enough, the IRS cadre also saw three of their senior officers being charge-sheeted by the Narendra Modi government for creating panic in times of unprecedented uncertainty with the “irresponsible” report.
The biggest joke for these 50 “young IRS” is going to be when @narendramodi is going to throw their stupid suggestion in the dust bin.
My problem is with the entire dept as to how they could even think like this and document their thesis and even release it 🤣🤝 #IRSJokes
— Ashu (@muglikar_) April 26, 2020
Given that the IRS – the eyes and ears of the government’s economic decision-makers – became the source of widespread anxiety at the time of a grave crisis, it is ThePrint’s Newsmaker of The Week.
Also read: Silencing the IRS — the story of Modi govt’s face-off with an elite civil service
The not-so-shrewd taxman
In popular imagination, the average IRS officer has seldom been more than a threatening, unsympathetic tax collector, slapping notices and conducting raids.
The report only strengthened this image, with many decrying the report for its lack of theoretical grounding, and Indians cringing at having to pay higher taxes at a time when businesses are shutting down, jobs are being lost and payment of wages is becoming a struggle.
“All Services must urgently review the economics curriculum at their training academies — for it is disturbing that some of our smartest young people should think that raising taxes during an unprecedented economic crisis is a good idea,” wrote Nitin Pai, director of Takshashila Institution, in ThePrint.
But the image of IRS as a tax-obsessed breed of government servants is unfounded.
Even if the IRS officers are seen as the frontline soldiers of a regime accused of ‘tax terrorism’, they are routinely outwitted by the public. Many Indians routinely get away, often with the not-so-tacit consent of the political executive, with not paying taxes or finding legal loopholes.
“The Credit Suisse Report implies that around 3,500 Indians hold wealth that would provide annual rentier incomes in excess of ₹500 crore. But the CBDT data show that only 179 individuals reported this level of income in 2017-18,” C.P. Chandrasekhar and Jayati Ghosh had pointed out.
Year after year, actual tax collections remain less than the steep targets set by the government.
If the IRS officers still continue to be viewed with a sense of deep suspicion by the public, it perhaps has to do with the Indian upper-middle class and upper-class’ aversion to paying taxes.
Also read: Dear young IRS officers, taxing the rich in Covid times is bad economics
Prisoners of UPSC cage
But there is another more structural problem that this controversy has highlighted – IRS officers are expected to have the rigour of economists, even as they operate in a system that does little to encourage specialisation.
IRS officers are assigned their area of ‘expertise’ not on the basis of interest or aptitude, but solely on the basis of their marks in an exam they take in their 20s.
IRS officers, like those of the other 20-plus civil services in the country, are products of the same prestigious, competitive UPSC examination that produces officers for the Indian Administrative Service.
So, in a system that assigns domain expertise so arbitrarily, we expect IRS officers to be not just the government’s economic foot soldiers, but also its key economic thinkers. There are a group of people who simply scored marginally less than the toppers of the exam and significantly more than the lakhs who appeared for it.
“Why is it that we should always remain on the margins of decision-making just because we scored lesser than someone in an exam we took 20 years ago?” an IRS officer once asked me.
Also read: Covid-19 cess, 40% tax for rich – IRS officers offer economy-revival tips to Modi govt
The perennial runners-up
For the IRS, like any other non-IAS entrants into India’s civil services, the glass ceiling is set from the start.
Even within their domain of finance and revenue, IRS officers are relegated to positions subordinate to the IAS. When was the last time the country had a finance or revenue secretary who was from the revenue service – was the question asked by several IRS officers when the Narendra Modi government came up with a formal policy on lateral entry in 2018.
Yet, despite the systemic biases, the almost 5,000 officers-strong cadre of the IRS has constantly been jostling for more administrative space in the system.
Increasingly, they are serving in all government ministries as directors and joint secretaries – the top positions of secretaries still remain the stranglehold of the IAS – and making policies in areas that have nothing to do with revenue.
They are serving as officers in India’s premier investigative, vigilance and constitutional bodies like the Central Bureau of Investigation, Enforcement Directorate, Central Vigilance Commission, and even the Election Commission – where the second in line to be the Chief Election Commissioner of the country is, in fact, an IRS officer.
Views are personal.
Its not about social classes. Salaried people – whatever class they may belong to – pay their share of taxes. Its the business community which is averse to paying tax. Since business and politics are closely intertwined, the politicians more often than not help businessmen to get away with paying little to no tax. India has one of the poorest direct tax to GDP ratio in the world. All thanks to the incredible ability of the Indian business community to find loopholes and not pay taxes. Or else to indulge in illegal blackmoney activities.
If our IRS officers think this way, its solely due to their training and education. The course material has been drawn up by “eminent scholars” over the previous seven decades, a huge majority of whom subscribe to Marxist beliefs and practices. Little wonder then that our young IRS officers are simply clueless about how to navigate the economy through a pandemic.
I am a tax lawyer. I can tell you that you are mistaken about the inclination to evade tax by the middle class. These are the sitting ducks who have no means of evading the IT. Look at business class if you have to see who evades tax. If the tax rates are moderate, none would want to evade it. People would rather pay tax and wash off their hands, than face the hassel of tax notices.
Taxation is a part of the subject “Public Finance”, which is a part of economics. So, IRS officers canot wear blinkers and talk like tax collectors, without regard to the state of Economy. This is the height of ignorance, and speaks of woeful quality of training given in the government academies. Even if the training and probation falls short of expectation, aren’t these youngsters inclined to learn on their own about the job they have to do for the rest of their lives? What is alarming is that if these youngsters with such ignoramous and negative mind set becomes key decision makers in the next decade or two, what will be the fate of a tax payer? Tax terrorism is here to stay for at least one more generation.
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