Tax Officials Resign Due To ‘Fear Psychosis’ Caused By ‘Unrealistic’ Collection Targets

According to a press report, the ‘unrealistic’ targets imposed by the Government on tax officials has taken a toll. The officials are reportedly under “stress” and are suffering from “fear psychosis“. Many have reportedly quit their jobs as they are unable to bear the pressure

Collect 17% more tax despite slowdown or face consequences

The press report states that Prime Minister Narendra Modi’s government wants officials to collect 17% more in direct taxes this year as New Delhi seeks to shore up revenues amid a sharp economic slowdown.

The target has been maintained even though Modi recently approved a massive cut in corporate taxes, which are part of direct taxes, and warned officers not to harass businesses in their drive to collect revenue.

Over a dozen tax officials interviewed by Reuters said they are stuck between a push to meet unrealistic collection targets, which influence their appraisals and transfers, and the fear of being accused of over-zealousness if they crack down on evasion.

Confusion & bungling galore have created a ‘madhouse’

Critics say Modi’s demands of his tax officials are symptomatic of the confusion surrounding his government’s economic policies, and that the bungling has contributed to a slowdown in growth.

“Even well-meaning people find it very difficult to tell him, ‘This is wrong, let’s do it another way,‘” said Sebastian Morris, a senior faculty member at the Indian Institute of Management, Ahmedabad, India’s premier business school.

Conflicting signals on issues ranging from tax policy to the auto sector were confusing, Morris said. “It’s a madhouse.”

“Black sheep” sacked for overreaching authority

The government compulsorily retired 64 senior tax officers over alleged wrongdoing this year, a government source said.

“Some black sheep in the tax administration may have misused their powers and harassed taxpayers,” Modi told the Economic Times in August. “We will not tolerate this type of behaviour.”

Officials suffer fear psychosis

Finance Minister Nirmala Sitharaman has been touring tax offices saying that the revenue target is realistic and therefore collectors “need not overstretch.”

But there is no clear definition of over-reach, so confused officers are hesitant about how to handle truant taxpayers, said Bhattacharya of the tax officers’ association.

“In an effort to erase the fear psychosis in the public, tax officers are now going through a fear psychosis themselves,” he said.

Stress is unbearable

“The level of impatience in the government has gone up … Anyone who has any alternate option says: ‘Why should we stay in the department?’” said one officer who has quit the job and plans to go tend the family farm.

He said the stress had “become unbearable.”

“The pressure is getting greater. To achieve our targets we are under pressure, so we do some things that we don’t want to do,” said another tax official in northern India.

Top tax officials opt for VRS

The report states that twenty-two top-level tax department officers have opted for voluntary retirement so far this year and around 34 did so in 2018, according to data provided by Bhaskar Bhattacharya, vice president of the Income Tax Gazetted Officers’ Association.

Bhattacharya was unable to provide comparative data but said bureaucrats ditching jobs usually considered prestigious and powerful was rare.

“Even seasoned officers after working for 25-30 years cannot take this pressure anymore,” he said.

“There are applications for voluntary retirement coming in one after the other despite the fact that there is no voluntary retirement or golden handshake scheme in the department.”

While only a small fraction of the tax department’s few thousand senior officers have quit, several officials in the tax department said the departures provided a snapshot of broader discontent that has also led to internal transfers as well as resignations among lower-level employees.