Tax this year is your incentive next year:

How can the country be thankful to its tax payers and incentivize them more than the non tax payers. How can they make the act of paying tax an act of pride rather than an act of duty or an act to avoid punishment?

Income tax payers do a thankless job of earning their wealth and parting with a share of it for the nation. They do their bit and cover for the the well being of the non income tax payers as well.

In return what do they get? They get what everyone else gets- The same incentives that are given to anyone else who has skills but is lazy enough to work hard to earn money that will be taxable, any one else who is unfortunate to not have enough skills to earn enough money to pay tax, anyone who is too skillful makes money a plenty but resourceful enough not to pay appropriate taxes.

What the tax payer today gets over and above the non tax payer is the stress to keep his records clean, file tax on time and pay tax on time and sometimes a hounding from the taxmen.

This is hardly an incentive. It is on the contrary punitive. The fear of being punished is the driving force here. This is not something that makes a tax payer proud of the fact that he has created enough value over the year that the nation thinks he can contribute some for the nation. 

Can the nation thank the tax payer for acquiring enough skills over his lifespan so that he is a tax payer today. Can the nation thank him for working harder to make enough money so that some gets into its coffers as well. Can the nation thank him for being honest enough to come forward to pay the taxes.

There are many ways. Very many ways.Not a single government has ever shown the inclination to Salute the tax payer. We are no less than the Solider when it comes to nation building. 

I have a simple solution:

Tax this year is your incentive next year

If a person makes 10 Lacs of Taxable Income in Financial Year X and pays a tax of 2 Lacs for Financial Year X.

If the same person makes 13 Lacs of Taxable Income in Financial Year (X+1) , Can we Calculate Tax on the Amount (13 Lacs - 2 Lacs(Tax Paid last fin Year) ) instead of the whole 13 Lacs.

This is something that will motivate and incentivise people to file tax every single year and higher they tax they pay this year, higher the incentive next year.