India's growth factor.

Less than 4% of all Indians pay income tax. If we take 4% then the total number of taxpayers will be 48 million. Of this, a colossal 89% earn less than Rs 500,000 a year, 5.5% earn between Rs 500,000 and 1 million a year and only 1.3% earn more than Rs 2 million a year. TOI, May 3. Despite ever more draconian rules to expand the " tax base " the numbers paying tax are increasing at slower rates. In 2008-9 around 18 million taxpayers were added to existing figures, in 2009-10 another 17 million were added but only 15 million were added between 2010-11. Every effort is made to get taxes deducted at source which means that the government gets paid before we do but punishing people will not increase numbers, genuine economic growth will. Presently most of our " fantastic " growth story is dependent on the astronomical rises in prices of properties. Any apartment of 1000 sq ft in any major city costs in excess of Rs 10 million. Another 500,000 apartments are being built in the National Capital region, which includes Delhi and parts of Ghaziabad, Noida and Gurgaon, and are expected to be priced between Rs 2.5-5 million. Registration and stamp duty vary between 6-12% so another million will be added to the cost. Property tax calculated on these values will also be high. Of these, 86000 units will be completed this year, 50% in 2013 and the rest by 2015. The intriguing question is, who is buying at these prices? Taking the government's own figures only 2.64 million people earn between Rs 500,000-1 million a year and a mere 624,000 earn more than Rs 2 million a year. Add in another 1 million for those earning between Rs 1-2 million a year and we have a grand total of 4 million people who earn more than Rs 500,000 a year. With inflation rocketing upwards at 10% it costs at least Rs 25000 per month for a family of 4 to survive. This includes food, clothes, travel and energy but not rent, school fees or medical expenses. So a person earning Rs 500,000 per year will save almost nothing after paying tax and expenses for his family. How is such a person to make a down-payment and afford monthly EMI for a mortgage. Yet property prices keep zooming merrily upwards while builders advise people to buy now before they become even more expensive. The taxes on property sales, the money earned by those selling ancestral land and the black money in every sale are what has been feeding our growth. Politicians being criminals think that threatening and persecuting citizens will increase tax collections so that they and their thieving civil servant friends can continue with their loot. This adversarial system of laws were written by the British to subdue a hostile population and have no place in a free country. As our representatives politicians should be trying to make our lives richer and more pleasant by providing the best services and infrastructure at the lowest possible tax levels. Sadly criminals can never be altruistic.