Thread on govt claims on our consumption!As citizens,imp to see how our consumer spends get paid to govt in form of taxes.While there r analysis on total tax paid to govt etc on fuel/car etc,idea is to look at total aggregate private consumption & see center+state indirect taxes! 
It amazes me that over last 30 years toral taxes paid to govt from our consumer wallets is broadly been in a narrow range of 16-21%.we have seen service tax (1995),VAT(2005), GST(2017)- major changes of taxation in these 30 years, across multiple govts and biz cycles
Our consumer spends have massively changed over last 30 years,towards more affluent categories over time.One time settlement,compliance or lack of it have all been narrative that have made to headlines often.Yet optically it appears there hasn't been much change!
But looking underneath the broader govt claim reveals a big shift in which our consumption wallets are now being shared with center and state govts!Center's claim on our wallets have reduced by about 400bps (12% to 8%), even as states have increased from 8% to 12%!
In 2002, for first time, state claim on our wallets exceeded the center and then the tax creep of states has been pretty much unabated! This coincides with property boom from 2002-2013 as well as high commodity prices/inflation & resultant ad valorem taxes for states
From 2013, state claims on our consumer spends declined reflecting poor real estate n lower commodity prices in general. However post 2017 (after GST), state claims have further gone up sharply. Even property taxes for states have gone up by 16%(fy17-20) as against 3%(fy13-17)!!!
Slicing the trends over last 30 years reveals different approaches by govts as well as responding to externalities like GFC, GST etc.Barring fy03-08 (commodity,property boom), by & large across all periods govt claims on our wallets have surprisingly either been flat or reduced!
Now coming to GST -center tax on consumption has reduced as overall GST rates are down.States have further increased taxes(fuel, alcohol, property taxes have gone up).So ideally, states shd not complain of 14% compensation as their indirect taxes have grown at 15.6%!
Topical analysis is fuel tax hikes by both state & center. Ex of petro-tax, center consumption tax growth has moderated significantly, even as states have seen good growth (esp FY17-20)
To sum up,while there is always expectation from central govt to cut tax rates etc,as citizens,understand that states take almost 60% of consumption taxes(used to be 40% in 1991).States' economic policies matter more to us,& states need to take lead to cut taxes to boost demand!!
Lastly, how does 20% odd of govt claims in India compare with rest of world! Not very different as bulk of OECD countries also have overall consumption tax as % of Pvt consumption in broad range of 20-25%!
End of thread!
