Tamil Nadu Farmers
A farmer from the southern state of Tamil Nadu rubs blood on a fellow protestors feet after deliberately cutting himself with a razor blade during a protest demanding a drought-relief package from the federal government, in New Delhi, India April 7, 2017.Reuters

Personal taxes have risen, contrary to popular expectations from an election-year budget. That has come as a rude shock to the common man who bore the brunt of demonitisation and GST, hoping that more equitable days were in the offing. That's not to be.

Demonitisation was trumpeted as a surgical strike against black money, the cardinal plague in a country saddled with hundreds of millions living in poverty and millions paying taxes through their noses. GST was supposed to re-engineer the indirect tax collection, which would then translate into an easier direct tax regime.

But what has happened? Hopes of an income tax slab change and a favourable tweak in the exemption limits were dashed. In fact, the tax load on the salaried class has just increased. While Jaitley kept the existing tax slabs intact, he raised the cess on tax from 3 percent to 4 percent. With this, a taxpayer in the highest bracket will pay an additional Rs 2,625 in taxes in the next assessment year.

And the re-introduction of the standard deduction of Rs 40,000 only smiles to deceive. This will replace the transport allowance of Rs 19,200 and medical reimbursement of Rs 15,000 currently in place. That means the real benefit in terms of taxes saved will be a few hundred rupees following this reassignment. In fact, when the rise in cess on tax is factored in, taxpayers in all slabs end up paying more from this year.

Apparently the indirect tax scenario isn't inspiring any confidence in the finance minister. That, despite the Economic Survey stating that the taxpayer base in the country has risen by more than 50 percent following the implementation of GST. The survey revealed that more 10 million taxpayers were registered under GST, compared with the 6.5 million registrations in the pre-GST era. There was indeed an uptick in direct tax collections post demonitisation but the increase was nowhere in the levels that would have eased the pain on taxpayers.

In any case demonitisation had a larger symbolic value -- and that's exactly the premise on which the common man jovially walked with the Prime Minister and the government in those difficult days. The spirit of demonitisation was the fight against, black money, all those hoarded wealth, illegal investments in foreign tax havens, benami assets, gold hoardings, the loot of the real estate mafia in collusion with government functionaries and the like.

Sadly, there has been little follow up action after the big bang demonitisation. If there were, the taxation slant in the budget would have been different. The more things change the more they remain the same.

At the same time, the government has proposed raising salaries of the President, Vice-President and the Governors. It has also declared the salaries of MPs will be revised every five years now. Of course upwardly. These salary hikes apply to only a few hundreds of Indians, but the intent and message cannot be missed. Written into the budget document, this invariably signalled the outlook of the ruling classes. We can't do much to alleviate the tax pain of a low wage salaried person earning Rs 3 lakh a year but we are happy to treat ourselves to better pay no matter what.

Someone who earns between 3 lakh and 5 lakh pays income tax of Rs 13,000 a year, plus the newly announced cess on tax. If she is the sole income earner of a family of four, the average per person monthly income in that household works out to a little above Rs 10,000 a month. This income class can be taxed with vengeance, don't ask any questions.

The saving grace in the budget, from a pro-poor perspective, is the universal health insurance scheme under which as many as 10 crore families will get a Rs 5 lakh health insurance cover. Just hope the fine print doesn't betray the promise and the execution doesn't derail it.