Making People Pay

I remember a joke I read long back. A man shows the visitor his dog and says “He is like a member of our family.” The visitor, a tax man retorts, “But that doesn’t give you the right to mention him as a dependent in your tax returns and claim tax breaks.” Tax is something that is so entrenched in our psyche that it has even become part of our jokes, movies and day to day conversations. I can immediately remember at least 2 popular Indian movies around the theme of taxation: ‘Lagaan’ and ‘Special 26’. One of the most important events we remember in our freedom struggle was Gandhi’s Dandi march which was against the salt tax. But ironically though taxation is a topic which holds a lot of emotional baggage, if we come to think of it, our intellectual understanding of the same is rather limited. We do not even want to understand the technical details of the annual taxes we file and prefer to outsource it off to a professional. This book, “Making People Pay” gives us an opportunity to gain a holistic understanding of this esoteric yet so relevant topic.

The author, Dr. Sibichen Mathew, a tax man himself, an Indian revenue service official who has served as the additional commissioner of income tax, is an erudite scholar whose qualifications alone can fill an entire blog post. He beautifully blends theoretical rigor with practical insights to create an eminently readable treatise on taxation. He has taken the topic head on starting right from the genesis of the concept of taxation in historic times, right up to the challenges posed to the international taxation regime due to globalization and manipulation of tax havens by multinational firms.

The author has managed to cover this topic from almost all possible angles. The book covers the historic context, both from an Indian and international perspective, the economic aspects, the operational aspects and the human aspects. He has written in a simple language that can be understood by a lay man without sacrificing the academic rigor. However the casual reader may like to skip the sections pertaining to the survey methodologies and sources as that might make it look a bit formal and heavy. They are there just for the more serious readers who will want to validate the claims made by the author. The general reader can just lay back, skip those portions and just read through the high level ideas the author tries to present. The author has enriched the book with interesting anecdotes accompanied by nice illustrations throughout the book to break the monotony of the reading experience and put a smile on the reader’s face.

Coming to the content, the first topic after the introduction sets the historic context to taxation and how history has shaped people’s mindset towards taxes which will possibly influence present day behavior. The next chapter presents the view of taxation and an individual’s compliance behavior purely from an economic angle. The following chapter brings out how a nation's politics and taxation policies are closely intertwined. Having set the background, the author then details the survey method he has used for his hypothesis. The next two chapters deal with the author’s hypothesis substantiated by surveys and backed by statistical significance of findings. The author tries to point out that the major causes for non-payment of taxes are sociological rather than economical: a perception that their peers also do no pay taxes, a perception that the government is corrupt and does not use the tax income for the said social objective and there is no seriousness on the part of tax authorities to stop evasion. The book also provides some empirical evidence to allay misconceptions about general harassment of public by tax authorities.

Overall, it is very insightful book and I would recommend everyone to pick it up to gain a better understanding of this critical and unavoidable aspect of our lives.

To know more about the book and the author, you can click here.