Why were tax collections at record highs from US to UK to India despite weak economic recovery
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The tax collection of India for FY22, in fact, has been approximately RS 2 billion more than revised estimates, which in turn were a good RS 3 billion more than budgeted estimates last year. This rhythm of final tax revenues is not a surprise. He had written at the time of presenting the FY23 budget that tax revenues for FY22 are being underestimated.
In fact, it had argued that even by very conservative estimates, net tax revenues at the center at FY22 would be from 19.3-20 billion compared to 17.65 billion indicated in the revised estimates.Now try to analyze why tax collections were recorded in a record, when India’s GDP is likely to be only 1.8% more than production in March 2020, that is, it does. two years. Let’s start noting that this high collection of taxes is the experience in some other countries as well.In this attached piece, Justin Threur and Alexandra Fall of the Pew, the charitable trusts point out that tax collections in more than half of the United States states over the last year exceeded the collections they would have done if they had grown in the Pre-pandemic rhythm. .
The Attached Reuters report states similarly to Japan’s tax claims for the year ended March 31 were in a record to the fullest, surpassing budget estimates. And, more recently, the report of the Department of Finance of the Government of the UK Deputy points out that for the calendar 2021 all the tax leaders: the income tax, the tax on the corporation and the VAT grew between 17 and 30% at the levels of years ago.Then, which explains the collections of registered taxes from us to the UK to India to Japan, in a year that saw a good recovery from a weak basis, but economic growth in most countries did not cross the level they would have achieved if they had grown in the pre-pandemic patzo.
This must be subject to research by researchers at the IMF and economists in global banks such as Citi and JP Morgan. Here are some possible reasons:First, in all countries, purchases of goods were superior to services services for most of the calendar 2020 and 2021. In all countries, it is easier to impose the chain of manufactured products, while many services They are informal escape the tax network.
Second, and, what is more important, the last half year has seen increasing inflation and inflation always raises the nominal parameters. The high prices of the products led to super normal earnings for metal companies, as well as for other product companies that could transmit price increases. In addition, the collections of customs duties in many countries, including India, rose as the nominal value of imports increased.
Third, the enormous stimuli of many governments such as the United States, United Kingdom, EU and Japan led to a collection in world trade in 2021. India, also reported record exports of $ 418 billion in FY22, as well as The recorded imports of $ 610Billion. Both press all the manufacturing ecosystem to result in a higher tax collection.In most countries, the pandemic tended to strengthen the formal sector at the expense of the informal sector. A recovery in the form of k has been the result in many economies, with an ultra-tight monetary policy that encourages the process, rewarding borrowers (which are usually less and richer) at the expense of savers (which are poorer and more Numerous).
While the curious case of the tax collections recorded in a sub-torque economic recovery context, it must be analyzed thoroughly,
the MOOT point is whether the tax collections will continue to grow in this fast clip. If we observe our reasons, there may be a question mark in some of the factors that probably caused the collections of registered taxes. The growth of services has been collected and purchases of goods have fought at least in massive consumption items of soaps to scooters. Global trade may suffer due to the Russian War-Ukraine and the resulting sanctions on Russia. In addition, it is likely that global economic activity is destroyed, since central banks have begun to shoot the extraordinary accommodation. However, inflation seems to be established to continue and even accelerated in the energy complex. This, and the high base of FY22, can also maintain robust tax collections in FY23, too.
