Taxation – Is Nagaland holding its breath; and poised for next calamity? ::::: Guest Column - M Chuba Ao, BJP national Vice President

By invitation -- M Chuba Ao, 

Like most human communities under the sky, we Nagas also love to say good things about ourselves. We do not mind asserting to ourselves and to others that Nagaland as a state is standing on the threshold of an economic boom. We love to believe we are self-reliant. No doubt we are all a bit emotional.

But economy and trade are certainly non-emotional affairs. Reality is that the economy is linked to people’s own contributions, that is the Taxation.

This brings us to a debate. To start with and with certain humility, I beg to state that Taxation is different from extortion. Over the years in the name of Article 371 (A) and Naga pride, we seem to have accepted Extortion as a way of life and at the same time, we are for a strong anti-taxation policy.

This is not quite an uncharted area of public debate but like many other communities we have been ‘selective’ talking about taxation matters and we have generally avoided any honest discussion on it.

A nationalist to the core !

I am not referring to Income Tax. We all are aware of the special exemptions for tribals/Nagas in Nagaland state or the respective tribal states. True, Nagaland is not entirely tax-exempt. We have the Nagaland Professions, Trades, Callings and Employments Taxation Act.

Now on the business front. There are Sales Tax, Excise Tax etc. We have heard of municipal tax.

The urban local bodies have been in public debate for the last few months for multiple reasons. As citizens in various towns we want ‘benefits’ of municipal bodies. We want central funding but we do not want to pay municipal tax. Is this justified?

“Render unto Caesar the things that are Caesar’s, and unto God the things that are God’s” – this quote is pretty well known to Nagas and is often talked about. I can also refer to — “Render therefore to all their due: taxes to whom taxes are due, customs to whom customs, fear to whom fear, honor to whom honor” (verses 5-7).

Some years back I read somewhere the phrase ‘A Tax payer in the service of the nation’. This is quite a powerful statement and my emphasis in this article will be around this principle.

Evolution of the taxation system is based on three yardsticks.

Of these the most important and well accepted reasoning is to Collect Revenues for the running of a welfare state. So, we have double standards here. We call ours a ‘welfare state’ but we have remained anti-taxes. So the next question comes: how will our state run? — The intellectual cover up could be anything. But the honest answer will be New Delhi should pay us or rather continue to pay us.

The government of India or the BJP have never said that the central funding will discontinue. My argument is simple — if voting during election is linked to ‘political participation’ of a citizen; paying taxes is her or his ‘economic participation’ in the democratic process.

A system is practiced even in villages where in village councils can collect taxes.

Then why are we running away from our responsibility at the state level? Well, we can’t go to Delhi for next century or so and keep telling the Govt of India — well, we are Nagas, you guaranteed us Art 371 (A) and statehood and hence you should continue to pay us.  

Hence, the most pragmatic thing to do while dealing with these questions is — let us start paying taxes.

In fact, a taxpayer is the ‘owner’ of the government’s resources and infrastructures. In our case, we are ‘dependent’ on Delhi and hence technically who would own the roads and other infrastructures. And worse, what would happen when Delhi’s fund flow stops?

Then there are other facets of the debate. We have gone through days of ‘tax deduction’ at source. We never complained. Now a critical issue, when we are paying taxes to underground organisations, we don’t complain.

Nagas also understand and respect the doctrine behind taxation policy.

The economic growth and development may come when the state government or concerned authorities have money (read revenues) in the coffers.

The internal revenue for another northeastern state of Mizoram in 2022-23 was 15 percent. This was achieved with a comparatively lesser population than Nagaland. But in Nagaland, the internal revenue was only 10 percent.

Therefore, is it not prudent to ponder whether the onus should be on us or not now to help “narrow” the widening and unenviable gap.

But Nagas are not thinking over the issue seriously. I am a BJP karyakarta and hence it will not be prudent on my part to comment anything in detail on the performance of our NDPP-BJP dispensation. But it will be prudent to understand and appreciate the fact that a good/regular tax prayer is a ‘Good Patriot’.

Nagas believe that we all are patriots and hence we Nagas should spend time and energy and make use of the terms in the proper sense so that we can jump to the next stage of becoming ‘genuinely good patriots’.

Not paying tax in the past, say during early statehood days of the 1960s was different. Today, a substantial number of Naga people are ‘rich’ or are self-reliant upper middle class; but the reluctance remains.

In more ways than one, I personally feel not paying taxes is antithesis to our Naga sense of self-pride and our own Naga ethics and values.

We have seen above that Nagaland’s internal revenue generation is about 10 percent. Compare this with all India figures, where for every rupee raised by the Government of India, 60 paise is through internal taxation. Of course, the rest is mobilised through borrowings from financial institutions.

At the national level, businesses and individuals who are supplying goods can claim GST exemption if their aggregate turnover is less than Rs 40 lakh in a financial year and also not fall in the category of compulsory registration.

For the hilly and north-eastern States of India, the limit has been revised. In the case of hilly and north-eastern states, if the aggregate turnover is up to Rs 10 lakhs, businesses and individuals supplying services can claim GST exemptions.

Hilly and north-eastern States would include Arunachal Pradesh, Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Tripura, Nagaland, Sikkim, Meghalaya, Mizoram, Assam, and Manipur.

It may be stated that the tribals of five Northeastern states – Nagaland, Tripura, Manipur, Mizoram and Arunachal Pradesh – are fully exempted from tax under Section 10 (26) of the Income Tax Act, 1961. So, if we are a member of a Scheduled Tribe in Nagaland and in four states Arunachal Pradesh, Manipur, Mizoram and Tripura, we are eligible for income tax exemptions. The issue is how long can the world’s largest democracy — and now standing ranked 5th globally — afford this luxury for a sizable population.

Does this policy not hinder the central government in financial management? At the same time, we have our issues of social menaces including corruption. So, where do we go from here?

Nagas are a God fearing community. We go to churches regularly and there also based on the income and each individual’s abilities, we pay a contribution amount. Then why and how can we justify not to pay to municipal bodies etc? The income tax exemptions are for weaker sections of people or for ‘backward’ people, it is argued. Most of us have also heard jokes and below the belt comments, People in the US or Japan are ‘working hard’ to move forward; but in India we have developed a habit where people are more than keen to call themselves ‘backward’.

When one pays taxes, one also shows how he/she can care for the country and the society. Does this tax concession or opposing taxes make people irresponsible also? If so, someone will have to bell the cat.

M Chuba Ao

(Views are personal. The writer is BJP National Vice President)