Racy Cases 53 – How many dogs do you have?


By V Pattabhi Ram and Mithun D’Souza

 “Hey, what’s the month of February best known for?” Wafers asked beaming with excitement. “For having 28 days,” replied China. Wafers sighed and said, “Try again.”   “Valentine’s day,” remarked China.  There was a rising edge to Wafers voice. “Can’t you be serious?” China knew when to draw a line and so asked, “Has it something to do with the Union Budget?”  Wafers was pleased that he had hit pay dirt.

Muskan, now in Class X, had watched TV channels spin out programs about the budget. She was Wafers’s niece. She couldn’t make much out of those programs and so asked, “Wafers, what is this budget all about?” Wafers explained, “The budget literally means an itemized summary of estimated expenditure for a given period along with proposals for financing them”. China yawned.  “Why can’t these accountants talk in layman’s language”, he wondered.  And so he supplied an example. “Muskan, it is like pocket money. First you plan your weekly needs for the movies and for the snacks. Then you ask dad for money.” Wafers spoke; again like a true accountant! “Yes. But only dad won’t go to prison if he doesn’t pay up”. Now which citizen has gone to prison for not paying taxes, wondered China.

“The word budget” continued Wafers “is a corruption of the medieval French word for small leather bag – ‘bougette’”. Muskan wasn’t pleased.  “Doesn’t budget mean “cheap” in English. Like budget hotel?” she asked.  “Yes, it does,” said Wafers.  And then added, “Its link with the parliamentary financial statements came in 1733, in an anonymous pamphlet called ‘The Budget Opened.’ “Though intended as a mocking description, within thirty years the word Budget came to be used to describe the financial statement.”

China asked Wafers to explain the key terms in the budget to Muskan. “The Finance Bill,” said Wafers, happy at hogging the attention, “consists of the government’s proposals for the imposition of new taxes and modification of the existing tax structure. It covers direct taxes like income tax and corporate tax.  It also covers indirect taxes imposed on goods manufactured or imported such as excise duties and custom duties”.

Muskan asked, “What is the difference between these two taxes?”  Wafers said, “In direct tax, the tax is collected from the person from whom it is meant to be collected.  In indirect tax, tax is collected from one party who in turn passes on the burden to another party.”  Muskan asked, “You mean, in direct tax the impact is on one and the same person while in the case of indirect tax the impact is on one person and the incidence is on another”.  China was impressed by Muskan’s diction. Wafers remembered what her professor had once told the class.  “If your mom takes money from your dad’s purse after checking with him, that’s direct tax.  If your mom takes money from your dad’s purse while he is sleeping that’s indirect tax”.

Muskan quoted Albert Einstein. “The hardest thing to understand in the world is income tax.” China agreed and added, “Wafers, you CA students should cheer. You do income tax all the time”. Wafers disagreed. “You see we have our share of worries. The budget can make or break us. For the exams, we have to study the entire union budget in detail.  We also have to study sundry other budgets – mini budgets’, ‘interim budgets’, ‘amendments to the budget’, ‘amendments to the amended provisions of the budget!’ Etc.”

“Count your blessings,” said China. “These days you and your tribe grit your teeth and wait for Budget news on alcohol, tobacco and fuel duties, or inheritance, stamp duty and capital gains tax. But back in the 19th century you were taxed according to how many dogs you had. Tax collectors used to kick the front door and count how many barks there were.” Muskan said, “It is not possible to do that now because there are too many stray dogs.  Who will pay tax for the stray dogs?” Even Wafers agreed that her niece had offered a distinct touch.

“Taxes on hats, dice, clocks, salt, hair powder, gloves, moustaches, and even artificial flowers have also been used in the past,” said China. Wafers wondered, and to imagine that the industry is making a big fuss about Fringe Benefit Tax. China hadn’t finished.  “Not to forget taxes on windows, doors, children and cattle.” Wafers asked, “If that practice were followed today, how would they deduct tax at source? And would slaughtering of cattle be deemed to be capital loss? China sighed.

“Is the budget all about taxes and taxes alone?” asked Muskan.  “No” said Wafers.  That’s only one part of the story.  The other part is “where the money goes”.  If the expenditure for a year exceeds the revenues during the year, you have a deficit budget. If it is the other way round, then you have a surplus budget”.  China added, “In India the norm has been to have only deficit budget.”  Muskan asked, “doesn’t that mean we are living beyond our means?”  She had hit the nail on the head. “Yes,” said China.  “It is like you wanting more of pocket money because you are spending more than what you are receiving”.

“But China” said Muskan “When is India going to break even and change course to a surplus budget? And how?” China was no finance minister; but he said, “Simple.  The government has to cut down expenditure and if need be increase revenue”.  “More taxes?” screamed Wafers, a trace of doom in her voice. “Well that is the price we pay for civilization” said someone from behind.  China explained, “No.  You can raise more revenue by strictly implementing the law”.  The voice from behind said, “Ha, easier said than done”.

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About Pattabhi Ram

A chartered accountant by profession, a writer by passion and a teacher by accidental choice.
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