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Opinion
Andy Mukherjee

If It Moves, Tax It. That's Desperate, India

The government is targeting foreign investors, high-earning employees and companies to plug its fiscal gap. Such overreach never ends well.

Dirty air and high tax? Foreign investors have other places to go.

Dirty air and high tax? Foreign investors have other places to go.

Photographer: MONEY SHARMA/AFP/Getty Images

Desperation is creeping into India’s economic policy-making. Having lost the fiscal plot, bureaucrats are trying to marshal resources by squeezing taxpayers, foreign investors, firms planning buybacks and even the central bank. Such overreach never ends well.

Tax collections last year were a full 1 percentage point of GDP lower than the 7.9% the government had hoped to obtain. Rathin Roy, director of the New Delhi-based National Institute of Public Finance and Policy, describes the situation as an “unstated fiscal crisis.” Instead of confronting the sober reality, revamping a flawed goods and services tax, and taking steps to pull the economy out of a synchronized slowdown in consumption and private investment, bureaucrats are trying to make up the revenue shortfall by taxing everything that moves.