The Impact of Direct and Indirect Taxes on Middle-Class Families: A Global Comparison, Case Studies, and Suggestions for Reform
Taxes form the backbone of a nation’s economy, funding development and welfare programs. However, in India, the burden of direct and indirect taxes, especially GST (Goods and Services Tax), often disproportionately impacts middle-class families. Rising inflation, high indirect taxes, and compliance complexities for businesses have underscored the need for reforms. This blog explores the challenges, compares India’s GST with global models, presents real-life case studies, and provides actionable suggestions for policymakers and taxpayers to make the tax system more equitable. Case Studies: The Human Element of GST Impact Case Study 1: A Middle-Class Family’s Struggle with Rising Costs The Patel Family from Gujarat earns ₹8 lakhs annually, with monthly expenses primarily on food, healthcare, and education. Post-GST implementation, the family reported: 30% increase in packaged food costs due to an 18% GST rate. Healthcare expenses rose by 20% , as medicines and diagnostic services ...