Taxation is a vexed issue both for the payers and the tax authorities in most of the countries all over the world.

If Adam Smith were alive today, he would wonder whether the canons of taxation propounded by him are really met these days.

If the tax levied is just and kept at lower levels, and if such taxes collected are spent by the authorities in a prudent manner resulting in some tangible benefit to the payers, there may be more willingness on the part of the payers.

However, in good many countries (India is also included in this list), the taxes are levied to meet supposedly productive purposes and to defray administrative expenses. However, in reality these productive purposes turn out to be unproductive once the monies collected by way of taxes are spent.

I would like to ponder over the vast amounts of such taxes collected in a country like India say during the last 60 years and arrive at the cost versus benefits derived. This topic itself could be a research topic for a serious student of economics and public finance.

Let us come back to our topic for discussion.

Recently (Feb 2010) in a landmark judgment, Court of Appeal in UK decided that centre of gravity of life and interest should be the focal point for tax treatment of its residents and not the actual residence led resident or non resident status in a long-running tax battle between HM Revenue & Customs and Robert Gaines-Cooper.

The Court of Appeal ruled that Robert Gaines-Cooper.who claimed to have severed links with the UK in the 1970s, was liable to pay UK tax despite spending fewer than 91 days a year in Britain. This was because “the centre of gravity of his life and interests” remained in the UK, the court said.

I believe, this ruling could pave the way for the tax men in other countries as well to expand their net and bring in to their fold more tax payers.

Surely, our Indian tax authorities will not lag behind in this effort.