TAXING TRUTHS: DECODING APPROPRIATE GST SHARES

BUT sir, most of GST is paid by the poor in India.

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This innocuous comment by a student during a discussion on the state of the Indian economy made me realise the extent to which some data lingers in people's mind.

The source of this claim was a report, 'Survival of the Richest: The India Story', published by the think-tank Oxfam and released at the World Economic Forum. The report claimed 64.3 percent of India's goods and services tax came from the poorest 50 percent of the population, while the wealthiest 10 percent contributed a mere 3-4 percent.

This stark portrayal of an unfair tax system made global headlines, influencing media and policy discussions in India-including as a question raised in parliament.

Released in January 2023, the figures are still cited at various places and linger on in people's mind, creating an impression of an unfair taxation system in place.

The realisation led me on a research path to find if GST is really mostly paid by the poorest of India. Turns out, it isn't so.

Fault in Oxfam's stats

While the Oxfam report makes audacious claims, a critical examination reveals a methodology so flawed it borders on intellectual dishonesty. As an indirect tax, GST is tied to consumption, meaning those who spend more typically, higher-income groups pay more in taxes. The report's conclusion contradicts this simple principle.