GST: How India can fix its problem of not collecting enough taxes
So, how do we collect more taxes? Using the GST and following up on the audit trails it generates.India simply does not collect as much tax as it should. The Centre and the states together collect tax worth about 17% of GDP, as much as Burkina Faso or Honduras does. Poor tax collections crimp the government’s ability to spend on the things it alone can finance, and stunt the nation’s ability to excel. India has to improve tax collections, & that does not mean raising tax rates.When Budget Day approaches, the discussion turns to tax cuts and the fiscal deficit. A more rational thing to worry about is the size of the budget, meaning government expenditure, relative to GDP. The Centre’s budget is about 13% of GDP. The states together spend more, accounting for 58% of the combined spending of the Centre and the states.Harvest Direct TaxesHow is the spending financed? Tax revenues, non-tax revenues (licence fees, dividends from state enterprises, etc), borrowings and some unborrowed ca…