Lagaan: The story of Taxes

Property tax is not something new in the current global taxation system
"We have a breed of people in the upper class of society who are not paying the taxes fairly. Middle and lower income class pay too much while the wealthy pay too little." [Representational Image]
"We have a breed of people in the upper class of society who are not paying the taxes fairly. Middle and lower income class pay too much while the wealthy pay too little." [Representational Image]thebluediamondgallery [Creative Commons]

Lagaan was one of the biggest Bollywood hits in 2001 and only the third Indian film to be nominated for a U.S. Academy Award. Even as the film was a work of fiction, the script was very close to real life as the storyline was making the movie-watchers believe that something like this could have happened.

It generated a patriotic fever in the country and on this basis (for being a patriotic movie), some television channels run it on the eve of the  republic day.

Precisely, Lagaan is the story about the resilience shown by the Indians when they were under the British Rule. They are already taxed to the bone by the British and their cronies, but when the rulers announce that they will double the Lagaan (tax) from all villagers, they decide to oppose it.

The anger against the double tax leads to the game of cricket played between the villagers and veteran British cricket players. The fate of the decision to impose double tax or stick to the existing tax regime is linked to the result of the cricket match.

This match hooks the audience to meticulously stick to the screen and not skip even a small moment of the film. The cricket match played for Lagaan (tax) serves as the spinal cord of the film and in real sense scripted its success globally.

Now you must be wondering why a film review, that too of a film that was released two decades back, is finding space in a financial column. Actually, the storyline has a base in levying irrational tax and the anger shown by the public against its imposition by the rulers (government).

The movie is a constant reminder about the taxes that burden common people. Today, the increasing burden of taxes continues to remain a cause of concern for one and all.

In the local context (Jammu and Kashmir), the reports of imposition of property tax from April this year circulating in the media have ignited debates among the general population.

What is the impact of taxation on the mindset of a society?

Ask anybody about taxes. you will learn ‘taxes are bad’. Most of the taxpayers don’t pay their taxes gladly. In fact, hatred of taxes is deeply ingrained in society. This kind of hatred by millions of people has established in the expressions like  taxation as a burden, an affliction, and an unfair punishment – all of which yearn for ‘relief.’ In fact the phrase ‘tax relief’ has strengthened the view of taxation as a misery or a burden on the people.

One of my acquaintances, a tax expert, analogued paying of taxes to donations paid as a charitable contribution to the works being done by organsiations for the welfare of the people and the society at large.

He explained that when the government as an institution is dedicated to doing good works and promoting public interest, we should not oppose taxes which are basically funding the government activities for public welfare.

By the standard of this argument, taxes are good and we should feel elated for all the good our tax payments are doing. Contributing toward the public good through payment of taxes cannot be seen as a bad thing. This yardstick makes sense to call the taxes good.

When we look at the technical aspects of taxes, we find taxes as our own dues that we pay to live in a democratic civilized society. Huge infrastructure in all sectors of the economy like the network of roads, buildings, power etc. available to all of us is in place because of the taxes paid by our previous clan of taxpayers. We as the current tax payers using all this incredible infrastructure pay the dues to maintain as well as expand it.

Meanwhile, there’s an unshakable belief that most of our tax money goes to help people other than ourselves. According to this common negative stereotype the tax money collected is redistributed to such programmes which have been tailored for welfare of people other than the taxpayers. This way taxpayers feel cheated and show resentment while depositing the taxes.

We have a breed of people in the upper class of society who are not paying the taxes fairly. Middle and lower income class pay too much while the wealthy pay too little.

At the moment a few questions remain unanswered. How fair are taxes levied? Is the quantum of tax fairly shouldered by various economic segments? Even the ways and means of tax collection bear a question mark on the fairness front. All of these have validated the controversies surrounding taxes in our society.

Actually, over a period of time, the burden of taxes has continuously been mounting in a sustained manner on the shoulders of a common man. Even at times the government was blamed for levying double tax on a single service or a product through tax reformation measures. On this count there are still many questions unanswered. Today, a common citizen is faced with imbalances on the income-expenditure front as they mutely witness a good percentage of their hard earned income being eaten up by a wide range of taxes.

What is Property Tax?

Property tax, commonly known as house tax, is levied on real estate in all forms. It is applicable for the ownership of office establishments, houses, commercial buildings, etc. It is not something new in the current global taxation system. It has often been subjected to political debate. This tax has its own strengths and weaknesses. It is near impossible to avoid or evade it after putting it in place. Notably, a tenant need not be concerned about property tax.

Precisely, it is a direct tax imposed on property ownership and owners of the properties have to pay the tax on an annual or semi-annual basis. The value of such properties is taken proportionately into consideration for assessment of the tax. Normally, it is the responsibility of the municipality of a particular area to conduct this assessment and work out the tax payable by a property owner.

How is Property Tax Assessed?

There are several factors which are taken into consideration to assess the property tax. The factors include location of the property, its occupancy status, type of property (residential, commercial, or land), type of construction (single floor, multi-storied, pukka or kucha structure), carpeted square area of the property, year of construction, etc.

It is notable that different municipal corporations across the country use different methods to derive the rate of property tax.

Usually, there are three methods - Annual Rental Value (ARV) System, A system based on the Capital Value, Unit Area Value System - by which property tax is calculated.

DISCLAIMER: The views and opinions expressed in this article are the personal opinions of the author.

The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.

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