Nothing fringe-like about this tax benefit

So quietly did our Finance Minister exempt political parties from his infamous fringe benefit tax that only a couple of financial newspapers...

So quietly did our Finance Minister exempt political parties from his infamous fringe benefit tax that only a couple of financial newspapers noticed. The exemption was made through an ordinance on October 31 and the relevant clause was written in language so convoluted that even had you or I spotted it we might have missed its meaning. ‘‘Provided that any person eligible for exemption under clause (23C) of Section 10 or registered under Section 12AA or a political party registered under Section 29A of the Representation of the People Act, 1951 shall not be deemed employer for the purpose of the chapter.’’ So sayeth the Taxation Laws (Amendment) Ordinance, ’05.

For those of you who may have forgotten let me remind you that the Fringe Benefit Tax was introduced by P Chidambaram in his last Budget. It caused instant uproar, including in this column, because it amounted to a tax on ordinary business expenses — hotels, entertainment, travel, office cars — and it also amounted to putting large corporations even more at the mercy of corrupt tax inspectors. Allow me an illustration. If I travel to Bangalore or Chennai to interview someone or cover some event and if The Indian Express is gracious enough to pay for this, Shekhar Gupta will have to prove that it was a legitimate business expense or pay fringe benefit tax. The same applies if I, on my night in Chennai, run up a dinner bill.

It is a foolish tax and of a piece with Chidambaram’s other brainwave — taxing cash withdrawals from banks — but the only hidden benefit was the prospect of seeing political parties squirm as they explained the fringe benefits their leaders enjoy. These days our political class is so high-flying their feet rarely touch the ground. The big leaders seem unable to go anywhere except by helicopter or private jet.

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Even humble peasants like Laloo Prasad Yadav and Mulayam Singh Yadav and uncompromisingly Marxist leaders like Comrade Sitaram Yechury are constantly seen hopping in and out of helicopters? Who pays for their high-flying?

What is the annual travel bill that my favorite Italian leader, Sonia Gandhi, runs up? Who paid for the private aeroplane to Russia? When in foreign lands our socialist politicians routinely stay in the best hotels and eat in fine restaurants? How much do their political parties spend on these fringe benefits? How much fun we could have had finding out, and now our spoilsport Finance Minister has cheated us of this simple pleasure.

Not only is it unfair for political parties to be exempted it is also a retrograde measure that reeks of our bad, old, socialist past when our officials and politicians lived totally off fringe benefits ostensibly because they could not afford to pay for anything out of the ‘‘socialist’’ salaries they were paid. They get paid more these days but still enjoy an extraordinary number of fringe benefits. If the Finance Minister were true to the idea of economic reform he would change this because it is wrong.

In these days of coalition government we are forced to have more ministers than we need. Allies do not come for free. Each junior minister costs taxpayers a minimum of Rs 5 lakhs a month. Even our newly jobless Minister without Portfolio, Natwar Singh, will continue to live in the style of a Cabinet Minister in a vast house, with a vast garden and a vast staff and vast amounts of free air travel. A Mumbai newspaper calculated that this will cost us Rs 7,89,000 a month. He should be considered a fringe benefit we can do without.

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Instead of exempting political parties from taxes the government should seriously consider making it compulsory for them to file proper returns and make their accounts public. The Finance Minister seems driven by the demon of black money but chooses to ignore the reality that it is black money that oils the Indian political machine.

He cannot have it both ways. If his concern about black money is sincere then instead of going for petty cheats he should go for the big boys, those whose black money fills the coffers of political parties. Without this vast, illicit source of income our political parties would have to be more careful about their accounts. It is time, anyway, that we knew more about the sources of their income. It is also time that they paid the same taxes that are imposed on us. Either there should be no fringe benefit tax or political parties must be forced to pay.

Write to tavleensinghexpressindia.com