The crux of my argument was :
- Australian pays tax => gets decent benefits from govt in return => feels taxes are justified.
- Indian pays tax => receives inferior quality benefits from govt + has to bribe everywhere + most benefits accrue to non-tax paying section in form of freebies & subsidies => feels what am I paying taxes for? => feels taxes are high.
Your all 3 points are correct after recent tax cut. However, expectation is not to get same quality of services as developed nation despite paying similar taxes. Expectation is to get at least decent quality services (especially police and judiciary, which build people's trust) and not having to bribe everywhere.
I think I am going in circles so let me make this clear for now, India is NOT a rich nation - the govt's state capacity is NOT on par with some uber rich nations. Its capacity to provide services is limited too. The govt heavily relies on rapid economic growth (and the resultant increase in tax and non tax revenue) to make things better.
It is unrealistic to expect the kind of govt services one can experience in some other nations. India had very generous income tax regime even before today (when compared with other emerging economies). This govt is being pushed to raise indirect taxes in their effort to provide a literal income tax utopia and punishing consumption in the process which is generally considered bad for any emerging economy.
A lot (possibly a majority) of income tax payers benefitted from an already elitist govt set-up - they studied at decent state run institutions and were the direct descendants of a generation of first movers.
Think about this, if the socialist era Indian governments focused on building good quality schools and general vocational colleges (like the former Asian miracle economies) instead of focusing on IITs and IIMs the PIO class wouldn't exist today. Even today a guy from some random tribal village in Chattisgarh stands a negligible chance of making it to any premier state run institution/university and/or move up the socio-economic ladder - with or without reservations and all.
I am not trying to guilt trip anyone here but the mere fact that someone is/was eligible to pay income taxes in India directly implies that he/she directly and disproportionately benefited from the existing state capacity/set-ups at the cost of his/her less fortunate countrymen. If the previous governments pursued a more equitable approach to nation building, a lot of us elites (which includes myself too, btw) would find it way more challenging to be where we are today.
So yeah, I generally don't buy into this "why should I pay taxes when I receive jack from the state compared to this uber rich paradise" argument. Coming from Bengal, I have witnessed first hand how the schools are run across some of the remotest corners of WB - trust me when I say this, barring a few maybe, none of us would be able to write these long ass essays in English if we were born in those villages. The path to upward mobility does not exist there. Try as they might, they just cannot find a way to make 4-5X the per capita income.
Being able to pay income taxes is and was a privilege in India. And it should be viewed as such - which is kinda ironic because nobody likes paying taxes.
