The Fringe Falacy. Review on Union Budget 2005

A Budget, in layman's terms defines an individual's spending power to purchase a particular commodity or service.

The Union of sovereign socialist republic of India, under the CPM government delivered an agenda on February,28th which didn't really affect the above definition of most individuals.

A Tax Reform was much needed in India to ensure that some benefits of the booming economy pass on to the common man as well.But does it make sense to provide me tax benefits under categories A and B and levy additional taxes under category C and D?...A point to ponder about!

India, being the case in point , is a country growing at a rapid pace.We are in a mode to adopt global (Read US) reforms for private sector since a big part of investments in india are from US based MNCs.We have managed to adopt global processes but our psyche still remains very socialistic.

The Fringe Benefits tax says it all! Fringe Benefits technically mean benefits given to employees of a firm to elivate their standard of living and to help them deliver higher levels of productivity.A 5-Star hotel accomodation on a tour, Late night dinner expenses, Overtime Travel expenses ,Cell phone expenses are some of the benefits falling under Fringe Benefits.

Imagine a life when you have to stay in an out-of-sorts roadside Shady hotel while on a tour or making official calls at your own expense and taking a cheaper mode of transport for night travel to save costs ,endangering your safety!Under such a circumstance many employees may realize the best option is to save on their costs and ensure their safety at the cost of productivity.How in the name of God does it make sense for a responsible government to question the benefits provided by a private firm to its employees!And then they talk about reservation in private firms--Hail India!

Today,on one hand I am saving the absolute amount of tax I have to pay by some margin but on the other, my company is composing stringent rules for claiming Fringe Benefits offered to employees.At an individual level, although my C2C salary remains the same ,I am loosing out on the monetary benefits that were available to me earlier over and above C2C.In absolute terms it is more than the amount saved on tax deductions.

The Fringe Benefits Tax is not only wrong but even silly and stupid.If all telephone expenses fall under Fringe Benefits category (AS STATED IN THE BUDGET), then every call made by a call centre on a VoIP phone will be taxed 30% effectively ruining the only industry capable of providing entry level jobs to 1000s of fresh graduates.Obviously ,they are predictably 'relooking' into it now after protests!

The limit on cash withdrawl is another ridiculous case in point! If I plan a weekend getaway on an impulse (and in a way generate business for the tourism industry,the travel industry, the catering industry etc) ,I am oiling the wheels of the economy and fot that I am liable to be penalised by my own government!

If the intention is to curb Black Money transactions, then Mr.Chidambram should be made well aware that Black Money trading generally takes place with channels of money laundering,sale of shares and property and certainly not cash withdrawls of INR 10000.You can't even get a return air ticket with that amount!

The last year's budget levied a 2% Education cess but howmany people know that not a single penny collected from middle class tax payers has been spent on child education for which it was originally setup! One would expect a more sensible budget from the likes of Manmohan Singh and Chidambram on the panel but in India the red tapism, the beaurucracy and the allies in a coalition government will always play the spolisport at the expense of common man.

I have hoped against hope for a well structured and more systamatic Indian system of governance but I don't think we will ever be able to attain a purely people friendly and welfare oriented model as in certain Scandinavian countries..not today, not ever.