The various associations, or at least some of them covering 70,000 tax workers, of the central tax administration are protesting over how the Goods and Services Tax will….well, what they’re protesting about changes dependent upon whether you believe what they say or actually listen to their message. They’re going to wear black armbands upon Martyrs’ Day to protest that….–which is where the believe and listen part come in. Reading between the lines the complaint seems to be that there won’t be enough work for the central tax administration to be doing. Which is one useful manner of realising that the GST is going to be a good tax. Less work for the taxman, presumably, also means that the system as a whole is easier for everyone to deal with. And that is one of the markets of a good tax system, that we get the revenue we desire without too much fuss or effort.
Tax officers and employees across the country will wear black bands at work on Monday to protest against certain decisions taken by the Goods and Services Tax (GST) Council, the staff associations announced in New Delhi.
Central Board of Excise and Customs officials’s associations in a statement on Sunday said that they would protest the erosion in central government’s authority to levy and collect taxes through this token gesture on January 30, which is officially designated as Martyr’s Day to mark the assassination of Mahatma Gandhi on that day in 1948.
OK, so the states will handle all the small companies (up to 1.5 crore turnover) and then the national taxmen will share responsibility with the states for the larger businesses. This may or may not be a good idea, it’s certainly possible that it isn’t, just as it could be that it is. But that’s not really the heart of the complaint:
A body representing Indian Revenue Service (IRS) officers decided to stick to its earlier stand to observe Monday as a ‘black day’.
This is against the Goods and Services Tax (GST) Council’s decision to divide administrative turf between the Centre and states, despite an assurance by Finance Minister Arun Jaitley that the new indirect tax regime would create ample job opportunities.
That’ what and where the worry is. If the states are handling most of the GST work then there’s not all that much work, nor more job opportunities, for the national taxmen, are there?
The members of Indian Revenue Service (Customs and Central Excise), All India Association of Central Excise Gazetted Executive Officers, All India Central Excise Inspectors’ Association and All India Central Excise and Service Tax Ministerial Officers Association will participate in tomorrow’s symbolic protest.
At which point we need to think just a little bit. Collecting tax has two sets of costs associated with it. The first is that we’ve obviously got to employ taxmen to collect and check the system. This is indeed a cost of course–we can think about how lovely it is that people have jobs extracting blood from stones but every wage we pay to collect tax comes out of the tax being collected. We thus want a simple tax system which doesn’t require many people to collect the money. The second set of costs are much more important, that’s the costs to the taxpayers of compliance. A tax system with a plethora of different rates, each varying by geographic location, is going to need more people in the offices of the businesses paying the tax than a system with some very few rates that do not change over geography. So, the GST will save some of that cost–although not all of it, no tax system is ever going to be simple enough not to need someone to calculate it.
And the GST does seem to be reducing both of those costs, indeed that’s rather the point of it. And that’s what the central taxmen are complaining about. The GST is going to be simpler and thus there will be fewer opportunities for the central taxmen to stick their oar in and even, whisper such horrors gently, we might need fewer people employed as central taxmen.
All a terrible shame for the taxmens’ association of course, a boon for the rest of us, but that’s what they’re protesting about.