Monday, January 14, 2013

Key themes discussed in the book


Chapter 1    Introduction
Paying Taxes: A Matter of Money or Mind?

1.1    Visible and invisible taxes 
1.2    Visible and invisible benefits
1.3    What is income tax compliance?
1.4    Why should I pay?
1.5    .......... if I don’t get any benefit?
1.6    .......... if what I pay is siphoned off?   
1.7    .......... if what I pay is inefficiently applied?
1.8    .......... if it is such a hassle to follow the procedures?
1.9    ...........if it so difficult for me to understand the legal intricacies
1.10 .... if it is so harassing to interact with the tax department?
1.11......if I am unduly audited and investigated upon?
1.12  ....f it is too costly for me to comply?
1.13 .....if the people around me don’t pay?
1.14 .....if my non-payment does not benefit society but only gives me gains?
1.15 Tax evasion? Is it a serious offence?
1.16 Is tax evasion immoral?
1.17 In search of answers
1.18 A Matter of time
1.19 A Matter of money
1.20 A Matter of power
1.21 A Matter of mind: Towards an economic-sociology of taxation

Chapter 2  A Matter of Time? The History of Taxation

             2.1  Global perspectives
             2.2  Wars and the income tax
             2.3  History and the tax revolts
             2.4  Taxation and Colonialism

2.5 Indian tax history
2.6 The dominant cultural and religious determinants:
       System before the advent of the British
2.7  The exclusive colonial-economic orientation: Taxation during the British period
2.8  The predominant social dimensions: Taxation in post-independent India
2.9   Creating history

Chapter 3  A Matter of Money? The Economic of Taxation

               3.1 The processual dimensions
               3.2 Mobilizing revenue in a dynamic economy
               3.3 Emergence of market economy and issues in public
                     goods delivery
               3.4 Taxation as the instrument to resolve the resource crunch
               3.5 Deadweight cost of taxation and optimal tax theory
               3.6 Inability of Laffer Curve to explain tax behaviour
               3.7 Do tax rates have an impact on tax revenue?
               3.8 The tax revenue, GDP and the per-capita income
               3.9 Tax reforms across the world
              3.10 Tax reforms in India
              3.11 The analytical dimensions
              3.12 Taxation and tax compliance: The economist
              3.13 Economic-criminological approach
              3.14 Economic-behavioural approach
              3.15 Deterrence factors
              3.16 The tax compliance game: The agency models and
                      general equilibrium models
              3.17 Economic Analysis of taxation: An appraisal

Chapter 4   A Matter of Power? The Politics of Taxation

               4.1 Ideologies of taxation
               4.2 Politics, equity and taxation
               4.3 Contractarian perspectives in taxation
               4.4 Performance of the state and the tax compliance
               4.5 Nature of political system and country-specific tax
               4.6 Political context of tax policy
               4.7 Political popularity
               4.8 Tax incentives and pressure groups
               4.9 Ideological conflict Political ideology and economic
              4.10 Vote banks and cash banks
              4.11 Institutionalization of political financing
              4.12 Anti-tax political parties
              4.13 India-The budget and the tax proposals
              4.14 The political context of taxation

Chapter 5  A Matter of Approach? The Sociology of Taxation

              5.1 Sociological and social psychological orientations
              5.2 Towards an appropriate research focus
              5.3 Various research methods
              5.4 Disadvantages of using secondary data
              5.5 Shortcomings of surveys and questionnaires
              5.6 Experimental studies
              5.7 Other methods
              5.8 Semi-structured interview and case study
              5.9 Two empirical studies- Introduction

Chapter 6  A Matter of Mind?
                    Tax attitudes and tax behavioural perceptions in
                    a developing country

               6.1 Attitudes and its relation to behaviour
               6.2 Tax attitudes
               6.3 Statement specific responses indicating attitudes
               6.4 Perceptions on the role of the state and role performance
                     of the state
               6.5 Perceptions of the rational of taxation and perceived
                     Fairness of the state
               6.6 The changing role of the state in the globalized world
               6.7 Attitudes about tax compliance and evasion
               6.8 Attitudes and perceptions regarding tax laws and
                     tax administration fairness
               6.9 Perception of reasons for low tax compliance
              6.10 Respondents’ ranking for the strategies to increase
              6.11 Perception of self tax behaviour
              6.12 Past experience with the income tax department
              6.13 Taxpayer service
              6.14 Insights from the study
              6.15 Attitude and perception about the State and
                      the Governance
              6.16 Attitude and perception about the tax evasion of others
              6.17 Attitude towards state and governance and respondents’
                      Perceived tax behaviour
              6.18 Current tax behaviour of the respondents and their
                      past tax experiences
              6.19 Analysis with reference to background variables
              6.20 Insights in brief

Chapter 7 A Matter of Stick?
                 Nabbing the evader: The trajectory of Indian income
                 Tax enforcement
              7.1 The tax enforcement measures in India
              7.2 The power of search and seizure
              7.3 The search and seizure procedure as per Income tax Act
              7.4 The objectives and focus of the study
              7.5 The conversational interview
              7.6 Duration of search
              7.7 Seizure of valuables
              7.8 The interrogation, the disclosure and the retraction
              7.9 Analysis of the perception of conduct of search
             7.10 Behaviour of the search party
             7.11 Confidentiality of the search action
             7.12 Conduct of the search: What the officials say?
             7.13 Perception of post-search experiences
             7.14 Appeals against search assessments
             7.15 Punitive actions after the search
             7.16 Financial strains consequent to the search
             7.17 Emotional disturbances consequent to the search
             7.18 Health disturbances consequent to the search
             7.19 Familial and social support
             7.20 Why I was searched? Perceived reasons for search
             7.21 Why I was non-compliant? Perceived reasons for income
                     suppression / tax non-compliance
             7.22 Relationships after the search
             7.23 Social exposure and activity before and after search
             7.24 Religious activities before and after search
             7.25 Responses about the departmental proceedings after
                     the search
             7.26 Income Tax Department proximity before and
                     after search
             7.27 Anxiety of tax matters after completion of
                     all proceedings
7.28    Perceived impact of search on financial well being,
          business management and fiscal discipline
7.29    Perceived pre-search tax awareness perception and post-
         search tax awareness

Chapter 8  Tax Compliance and Tax Enforcement: Problems
                  and Prospects      

8.1    Procedural compliance and substantive compliance
8.2    The problem of enforcement
8.3    Tax payer –Tax authority game
8.4    Inter group comparison and fairness perception
8.5    The framing and overflowing
8.6    Multiple determinants of tax attitudes and resultant cognitive dissonance
8.7    Endogenous and exogenous stimuli
8.8    The evasion-avoidance ambiguity
8.9    Reciprocity as a factor and perception of corruption
8.10 Nature of state and taxpayer behavioural response
8.11Information on tax compliance in the public domain

Chapter 9  Taxation in a Globalized World: Transitional and
                   Transnational Challenges

                9.1 Is globalization good for the tax systems?
                9.2 The tax competition
                9.3 Wither welfare state?
                9.4 The need to see beyond tax rates
                9.5 Relevance for a Global Tax Research and Analysis
                9.6 Varying degrees of tax compliance
                9.7 Making People Pay

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Friday, January 29, 2010

Before you buy this book

  This book is not for every one. This is for those who want to live in a civilized state. The book is not aimed to proselytize for a tax state. Nor it advocates a tax haven. And least about a prospective tax-free heaven.  It only tries to answer certain mundane but frequently asked questions: Why pay taxes? What prompts people to hate taxes?   What happens if not paid? How to make the payment less painful?   Is paying taxes, a matter of money or matter of mind?

   Observing people and their behaviour and understanding the patterns that shape their decisions were of immense interest to me since early in my life. I tried to comprehend and appreciate the principles of and practices in natural sciences, where individuals and their environment were dissected to understand their inherent properties, composition and factors of sustenance. Even while engaging in experiments in the chemistry lab, I was puzzled at the rationale of duality created in knowledge as natural sciences and social sciences. Is natural science really ‘natural’? Does social science has more to do with nature than ‘social’? Natural science had lost its naturalness the moment man started acting on it. I found that the distinction between both the sciences were increasingly getting blurred. As most of the changes happening in the world are due to human interventions, one needs a social science perspective to understand them. It was thus clear to me that, to understand an event or a situation one has to know the people behind it. And in order to understand people, one needs to understand their attitudinal and behavioural patterns and the forms relationships take in an interactive environment.
    The above paradigm switch in my thought process might be an important factor that propelled me to turn to the study of social sciences. The decade long training and reading in social sciences were indeed stimulating. The opportunities to learn the finer theoretical and methodological themes that dominated the intelligentsia in different periods of history and different cultural contexts have enriched my understanding. I sincerely wished to be an arm chair academician at this point of time. 

     Gradually I realized that it is easy to dissect individuals and groups in the cozy libraries, seminar halls and project reports. It is not that comfortable to face people as they grapple with issues and challenges that emerge day by day. That is what I found when I joined the Indian civil services. My job as a taxman was not without challenges. I was seriously involved in the exercise of deepening of tax base, presuming that figures scribbled in the returns represented just a portion of the actual. But within a few years I realized that the tax potentiality lies not in the microscopic minority within but the vast majority outside the system. The road to widening the taxpayer base can never be smooth unless there is appropriate policy intervention, infrastructural transformation and effective service delivery. The efforts of the government in this regard started bearing fruits with every little step in the right direction. But, it was not clear why a country with considerable tax elasticity and tax potentiality found it difficult to attract more people to its tax rolls and gain more money to the direct taxes kitty. 

      I started my search for the answers several years back. Slowly I realized the need for a systematic macro analysis of the issues. I was in fact plunging myself to what many call ‘research’ on the subject. Is tax aversion unique to some countries? My analysis proved not. There are several historical, political and sociological factors that deter people from paying taxes globally. It is not just economic factors that determine tax compliance as it is widely thought off. Attempt in this book was to analyze those factors. Theoretical analyses given in the book were aimed to provide an understanding of the subject of tax compliance with a global perspective at the macro level. It threw open certain valid questions. Why people in some countries comply better than others? Why tax evasion is not frowned upon in some countries and disgraceful in some other countries?

   Any theoretical analysis on the behaviour of people is incomplete without analysis of primary data. Any statistical analysis based on secondary data cannot translate finer emotional and sociological facts in the realm of individuals and groups. An empirical analysis is imperative if one has to understand the why and how of tax non-compliance. A scientific analysis of the attitudes and perceptions of a sample of taxpayers can provide valuable insights into not only issues such as tax compliance and honesty at the personal level but also about interconnected social traits such as trust, reciprocity and altruism at the societal level. A sample from a developing country like India which is  in the process of implementing a very aggressive and sincere fiscal reforms in the last two decades, can provide valuable data for various other similarly placed countries. I have provided a methodological critique on the study of tax compliance before describing the results of the empirical studies conducted in this book 

   A unique attempt was also made here to understand tax evasion and tax enforcement through a study of tax evaders (or who were branded so) themselves. As a researcher, I was really surprised at the frank and genuine responses of the sample of tax payers who were searched by the Indian Income Tax Department. The interviews and case studies with them have, without exception, cumulatively and intellectually enriched me as they helped me to understand the behavioural pattern, attitudes, perceptions and expectations of taxpayers in general.

    It would be bliss if one can get rid of all taxes. But in a world of widespread inequity and inequality, income taxation is an economic-sociological instrument for overall well being of the people. Countries like India and other developing countries need to nurture their increasingly affluent citizenry in their endeavor to plug the inequalities. Globalization demands not only efficient, fair, and transparent tax states, but also increased tax co-operation to tackle tax evasion.

   Please take note of this disclaimer. All views expressed in this book are my personal views. The book is not from a taxman or a civil servant but from a social researcher.  The sole aim of the book is to provide a new analytical framework in the study of and approach towards tax evasion and tax enforcement.

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