Do the poor realise how lucky they are?

An article on the Goods and Services Taxes Bill, written by 2 authors, makes a case for the upper limit to be written into the constitution, so that the limit may not be raised according to the whim of the government of the day. The Congress has made it one of three demands before it will support the bill in the Rajya Sabha, where it has a majority, within 15 minutes. Which is a bit rich because it was the Congress which increased the number of services which are taxed, by coming out with a negative list in 2012, which means that every service not mentioned on the list is taxed, including rent and fees for in-hospital treatment. The government is resisting being tied down to an upper limit because politicians want to be able to increase handouts to win elections. It is very difficult to increase direct taxes, which is paid by around 3% of people, so the government depends on indirect taxes, comprised of excise, customs duty, VAT, service tax and so on. " Taxes are collected in two categories - direct taxes (tax on income and wealth) and indirect taxes ( tax on products and services)," write the authors. " Direct taxes typically impact the wealthy elite and the earning middle class. Indirect taxes are by standard convention, regressive in nature and their marginal impact is much greater on the poor than the rich. India collects twice as much in indirect taxes than direct taxes. India's direct-indirect tax ratio is 35:65. This is sharp contrast to most OECD nations where this ratio is either equal or higher i.e. more biased towards direct taxes. In other words, India's tax structure is sharply skewed towards placing a greater relative burden on the poor." India's tax to GDP ratio went from 6% in 1950 to 17% in 1990 but has stayed at the same level from 1990 to 2014 when per capita GDP increased 5 fold. It maybe because most of the increase was in the services sector which now contributes 52% to the GDP but is mainly is construction, hospitality and retail sectors where wages are low. Indirect taxes hurt the poor by increasing the cost of goods and services, making them too expensive so that the poor have to settle for a lesser quality of life. Total tax on a new car in Delhi ranges from 25-48%. Taxes on air fares constitute 50% of the price of the ticket. The tax component remains the same even when an airline reduces ticket prices so poor people cannot afford to fly. Politicians do not feel the pain because they get most services free, at taxpayer expense. The authors argue that indirect taxes increase inequality so there is a case for a fixed upper limit to impose some discipline on politicians. Everyone fighting for the poor. Do they realise how lucky they are?