India's poorest 50 per cent pay two-thirds of GST: Oxfam

The total GST collected (by both centres and the states) in 2021-22 was Rs 14.7 lakh crore, and going by the current trends, total GST collections in 2022-23 could touch Rs 18 lakh crore.

NEW DELHI: Contrary to the popular narrative that only a handful of Indians pay taxes, the latest Oxfam report “Survival of the Richest: The India Story” has an entirely different take on the issue.

The report shows how the poorest 50% of the population is paying most of the indirect taxes or consumption-related taxes.

According to the report, a little less than two-thirds (64.3%) of the total GST is coming from the bottom 50% of the population, one-third from the middle 40% and only 3-4% per cent from the richest 10% of the country.

The total GST collected (by both centres and the states) in 2021-22 was Rs 14.7 lakh crore, and going by the current trends, total GST collections in 2022-23 could touch Rs 18 lakh crore.

 

The Oxfam report further says that the bottom 50% of income group spends a higher percentage of their income on indirect taxes than the middle 40% and the top 10% combined. The bottom 50% of the population at an All-India level pays six times more on indirect taxation as a percentage of income compared to the top 10%.

“Estimates suggest that the bottom 50% spends 6.7% of their income on taxes for select food and non-food items. Middle 40% spend half of that at 3.3% of their income on food and non-food items. However, the top 10% wealth group spends a mere 0.4 per cent of their income on these items,” says the report.

The report suggests that the government should reduce the GST slabs on essential commodities, which form the majority of the poor and middle classes’ spending habits and hike the taxes on luxury goods. “This will lead to revenue generation, which is progressive in nature and reduces the burden on the poor,” it says.

Oxfam also exhorts levying a wealth tax on all Indian billionaires. It says that a 3% wealth tax on the total wealth of Indian billionaires can fund the National Health Mission, the largest healthcare scheme in India, with a current allocation of Rs 37,800 crores, for 5 years.

Source::: THE NEW INDIAN EXPRESS,  dated 16/01/2023.