India has an annual budget intended to raise revenues for carrying out basic public welfare functions such as education, health and sanitation. i f these have to be funded through additional cesses and surcharges, that raises the question whether normal budgetary revenues are being frittered away on sops to vested interests – exemplifying maximum government, minimum governance. t here has been a constant increase in collections through different kinds of cess and surcharge. t heir collections exceeded r s. 1 trillion in 2013-14, or 13.14% of gross tax revenue. A cess today is levied on an extraordinarily wide range of activities, from salt to “cine workers”.
The rationale for every additional cess gets more and more unconvincing – we need to cease taxation by stealth. a mong the problems with the Swachh Bharat cess is that it runs counter to the spirit of cooperative federalism as revenue raised through a cess or surcharge is excluded from the pool that is split between Centre and states. C a G has pointed out that there is inadequate transparency and incomplete reporting in government accounts of the manner in which the money is spent. Jaitley’s fiscal policy is also an example of schizophrenia in i ndia’s economic policymaking. t he government constantly urges r B i to cut interest rates to stimulate demand but also follows a tax policy which limits demand.
Given that it imposes an additional burden, a levy should need a powerful reason. a clean energy cess imposed specifically on dirty fossil fuels and ploughed back specifically into clean energy projects makes sense, as it improves our environment. But a cess to carry out a basic function such as sanitation is an example of taking people for granted. i t must be rolled back.
Indians provide the lion’s share of India’s savings and investment. t hey deserve the same consideration as foreign investors.