Budget proposals for 2017 will make it mandatory for every person to pay five per cent of their earnings, irrespective of the amount.
The proposal came up at a discussion the finance ministry had with heads of leading companies that pay taxes to the state.
The existing tax policy allows most people to avoid paying taxes, and a solution is needed to cover all through an income tax.
Noting that a considerable amount of the taxes paid by them go for public welfare, these company chiefs stressed the need to implement their proposal as a solution to the government’s financial woes.
However, there have been objections to this proposal when it was discussed by the government internally.
The opponents have warned that a worse form of public outcry should be expected for such a proposal than the recent VAT amendment.
TV ad criticized
There is also criticism of a reported spending of Rs. 128 million on television advertisements to tell the people about the need to pay taxes, a government representative told us.
Spending such money for the advertisements through four television channels has been a most unproductive measure, they have said.
Already, the public is paying considerable taxes through goods and services, and it will be inappropriate to burden them further through a new tax, the spokesman said.
He noted the need to target fields that are presently not paying taxes as well as tax defaulters.
Several economists said the government should think twice before going for such a measure that could however ease its financial burden.
Govt. should think twice
The appropriation bill presented recently shows curtailment of public welfare, and a new tax added on top of it will receive negatively by society, they said.
Instead of taking an undue risk, the tax policy should be amended to eliminate anomalies between the direct and indirect tax revenues, they have stressed.