MP, MLAs thriving salaries: Can centre & state govt come together to put brakes on their vaulting ambitions?

The AAP Delhi government’s generous increase, roughly four fold, to the Delhi MLAs has predictably raised the hackles of the opposition and the commentariat. What raises eyebrows even more is the elected representatives are immune from income tax on daily and constituency allowances. What is left is taxed as income from other sources without being pared down by tax deducted at source (TDS). [caption id=“attachment_2535742” align=“alignleft” width=“380”]  PTI[/caption] All expenses they incur become eligible for deduction if a nexus can be established between their profession and such expenses. With ingenious accounting and clever paperwork, the taxable income can be arranged within their ‘comfort zones’. Their only regret is unlike other businessmen and professionals taxed under income from business and profession, they cannot report a loss. Given a chance, they would have!! Be that as it may. The governments both at the center and states must bind themselves with a law that applies brakes on their vaulting ambitions—-salary to the elected representatives cannot be more than twice the average salary of their own employees. To wit, if the average salary of Delhi government employees is Rs 50,000 a month, MLAs cannot help themselves to more than Rs 1,00,000 a month. It is disingenuous to argue that these worthies must be remunerated generously to grease their itching palms with salary rather than with bribes. Bribe taking tendencies are in no way curbed by generous salaries. Human greed knows no bounds. Equally disingenuous is the plea that our elected representatives spend from their pockets on entertainment and staff. The tabs are in any case picked by the government. The example thus would have a salutary effect and percolate down the society. The corporate world would be constrained, if not shamed, to fall in line. And if it doesn’t, law will have to catch up. There have been instances of honchos helping themselves to obscenely lavish salaries. The company law is to be blamed substantially for this permissive regime—5% of profits can be taken as honcho salary. This translates into a scandalous Rs 500 crore if a company makes a profit of Rs 10,000 crore. And the irony is if a company is loss making, a minimum salary that itself is nothing to blush about can be paid—-heads I win, tails you lose. Salary should be a just compensation for what is brought to the table, profit or loss, period. And let us not confuse reward for risk taking with salaries. For display of that proclivity, rewards lie elsewhere—dividend and capital gains from sale of shares. The Infosys founder more than a decade ago pontificated from the CII pulpit that the top salary should not be more than 15 times the lowest salary. He was confined to doghouse by his biradri for such an effrontery for days together! But what he said was unexceptionable for the same reasons set adduced in the context of MPs and MLAs. A cap of say 5 times the average salary of garden variety employees would not be such a terrible idea. There is a view that while netas’ greed must be reined in, honchos’ mustn’t be because while MPs and MLAs get their salary from taxpayers’ money, honchos do not. But this is hairsplitting and quibbling. Taxpayers’ money is a facet of the larger public money. Shareholders’ money is as sacrosanct as taxpayers’. Vijay Mallya in the past used to justify his lavish lifestyle substantially bankrolled by his listed companies smugly on the ground that their shareholders have given their thumbs up for it! He was being economical with truth because even today promoters had a stranglehold and at any rate shareholder apathy is legendary. Proxy advisory firms have stepped into the scene only recently. Let the Indian legislatures blaze a trail in this regard. The Indian Parliament courted huge criticism by granting a generous pension of Rs 20,000 per month even for one time MPs that creeps up for every additional year in the Parliament. A garden variety central government employee has to bide his time for twenty long years before he becomes entitled to pension i.e. if he is not mandatorily governed by the New Pension Scheme (NPS). It can redeem itself substantially for this selfish act by acting on the suggestions made herein.