Perks of office

No problem if all earn a decent wage but count the perks too!

India’s central legislators have been asking for a raise for some time. And Arun Jaitley acceded to their wishes in the Union Budget and even proposed a law that would raise Parliamentarians’ salaries every five years indexed to inflation. A few days ago, the salaries of Supreme Court Judges was also significantly raised; ergo, Jaitley announced a huge raise for the President and the Vice-President. Admittedly, being a Parliamentarian despite what you read or watch in the media is a demanding and not a cheap job. Parliamentarians are always hosting delegations from their constituencies and need to travel with entourages when they visit their constituencies. But the income-tax paying public are not amused with this raise. After all, can you blame them, Jaitley did not make any major changes to the income tax rates, and indeed higher-income individuals would end up paying more tax once the new cess is considered. At the same time costs of imported cars, mobile phones and other pieces of electronics went up. And thanks to the new long-term capital gains tax even their investments in shares and some mutual funds would deliver a slightly lower return when encashed.

The issue that many have is not that Parliamentarians should not earn a decent salary, but this salary does not take into consideration the tremendous perks that they get. Free train travel, free flights, free healthcare, allowances for staff and hogging up valuable real estate in Lutyen’s Delhi. Each of these perks are not taxed the same way perks for the salaried class are taxed and some of them have an even greater distortion impact. The free housing that Parliamentarians get in Central Delhi for example plays a role in keeping rentals in Delhi high. The other perks are all paid for my the taxpayer. Nobody minds them getting a fair salary but it would be prudent to give MP’s the equivalent of what the salaried calss calls CTC that is, ‘Cost to Company’. What is an average Parliamentarians ‘Cost to Taxpayer’? For example, why should MPs be given cheap, subsidised housing? Normal taxpayers get a ‘House Rent Allowance’ (HRA) which allows for tax deductions. Give MPs a high HRA so they can live in Central Delhi if they want but don’t give them below-cost housing. The same applies across the board and unless individuals hold Constitutional or ministerial posts, as happens in most other democracies. No problem in fair salaries, but there is a problem with unfair perks.