Wednesday, January 2, 2008

Reward points for taxes

Governments could learn a thing or two from business .
The tax authorities spend efforts , money (on ads) to remind , motivate , induce fear in citizens to pay taxes . At least in India the concern of every tax paying citizen (and rightfully so) is that the tax money does not translate into benefits which they can tangibly experience e.g as infrastructure of any sort . Roads have potholes , cities look like extended garbage dumps , public transportation quality is erratic to non-existent depending on which part of India you happen to be in , public sanitation - non existent and so on . And to top it all we get to read every quarter about the crores of money pumped into incompetent companies like Air-India to fund the losses .
What does a tax payer get for his/her hard-earned money ? Value that hovers around zero is the answer if you are a tax paying Indian citizen .
While there is no substitute for the tax money to be translated into robust and efficient infrastructure and services - there are few things that the government can additionally do...
Adopt a system of Reward points for taxes paid . Anyway , every tax payer is allotted a PAN number . Use the PAN number to award points based on tax paid by the individual . Like airlines they should devise categories - blue , silver , gold , platinum , life time platinum (once tax received exceeds a certain value ) etc . These points can then be redeemed against/qualify the taxpayer for a variety of benefits e.g
1. Reduced interest rates for loans . These could be for loans from nationalised banks . It would have the indirect impact of helping the nationalised banks garner business ( soon private banks would follow suit )
2. Fast track clearance , processing for any government related matter e.g passport , settling of Income tax refunds etc
3. Reduced premium for insurance from government backed institutions
This list of possible benefits can be creatively and meaningfully expanded .
Basically translate the taxes paid into recognition and benefits that the tax-payer can experience as an individual . Raise the value for the tax-payer from the current near zero level to something significant . And in the process incentivise tax payments .

3 comments:

Arvind said...

My dear Savitha,

This would mean lots of positive reinforcement and that is the direction we need to take.

ARVIND KAUL

Anonymous said...

Wow! Thats positive reinforcement. Great idea. But, who, will, bell, the , cat?

Vijayendra said...

Hello Savitha,

Indeed a nice article. I agree with you that if Reward points or Incentives for paying tax is put in place, i am sure it would work wonders. Atleast it would help the honest tax payers.

Cheers, VJ