The man who came up with Income Tax in India - A controversial move

A controversial move

James Wilson, the Scotsman who created India's first Budget, introduced the income tax act in 1860. This created a big controversy. Wilson argued since the British provided safe and secure environment

to Indians to carry on trade they were justified in charging a fee in the form of an income tax.
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Agencies

Solving a crisis

Wilson arrived in India on November 28, 1859, two years after what the British call the Sepoy Mutiny and Indians their first War of Independence. The event had drained the resources of the government. The increased military expenditure had left it with big debts. Wilson, a self-taught economist with a deep knowledge of how the market worked, was seen to be the man who could salvage the grave financial situation.

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BCCL

Need for tax

Wilson, a liberal and strong proponent of the policy of laissez-faire, however, failed to see the irony of Britishers first suppressing Indians and then demanding a tax for providing them a secure atmosphere. His magazine, The Economist, was sceptical of imperialism. It argued in 1862 that colonies "would be just as valuable to us...if they were independent”. However, the magazine did believe in the colonial concept of the white man's burden, saying that "uncivilised races" were owed "guidance, guardianship and teaching".

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Agencies

Government intervention in economy

An article by two Canadian researchers in 2016 analysed the writings on India of Wilson's magazine from 1843 to the 1860s. It argued that "despite the adherence of the paper to the ideas of laissez-faire nineteenth-century liberal ideas of political economy, its writing on India — and the political career of its founder and editor, James Wilson — demonstrate a ready embrace of empire, government intervention in the economy, and increased taxation. The article suggests this difference can be explained by the expression of colonial difference and attitudes to race".

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Agencies

Valuable financial governance tool

While Wilson's Budget gave India a valuable financial governance tool, his income tax act upset businesses as well as the landed class, the zamindars. Aversion to pay income tax, though understandable in colonial times, has persisted even 70 years after Independence. In December 2016, an income-tax official revealed that India had just 24.4 lakh taxpayers who declared an annual income of over Rs 10 lakh yet 25 lakh new cars, including 35,000 luxury cars, were being bought every year for the last five years.

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