Taxing Till It Hurts

While historically tax has been defined as a payment for which we cannot expect anything in return, the time has come to challenge this idea as accountability of governments is a citizens’ demand

The time has come to challenge the definition of tax furnished by public finance – a compulsory payment (to a government) for which there is no quid pro quo. Can we continue to accept this definition? This question could have been asked of any government anywhere and at any time but the immediate provocation for asking this question in India comes from the latest 0.5 per cent addition to the service tax to fund Swachha Bharat. Let alone the question of whether the monies collected under this will actually clean up the country, what is galling is the increasing abdication by the government and its agencies of their responsibility. Just a few years ago, the central government made it mandatory for companies to spend 2 per cent of net profits for corporate social responsibility on areas which should really be governments’ responsibility.

Citizens will argue now that there has to be a quid pro quo to tax. If accountability is an important factor, citizens have a right to ask the government to account for the end use of such a tax collected. In fact, this can be asked especially of all specific taxes. For example, citizens of India have a right to know what is happening to the monies collected by way of education cess. Some may recall the surcharge of 15 paise in 1971 on bus fare for relief of Bangladesh refugees. All states other than Maharashtra have discontinued the surcharge, with Maharashtra renaming it a nutrition surcharge. In 2010, the BEST committee decided to include the 15 paise in the normal fare and not pass it on to the state government, trying to make permanent what was supposed to be temporary. Clearly, this didn’t happen as a PIL was filed in 2014 in Bombay High Court challenging the continued collection. According to the PIL, an amount of Rs 388.96 crore had been collected and lying idle, and thus not being used for the purpose for which it was collected. And this was a specific charge! The point is this: the government, through SEBI, demands a report on the end use of funds when corporate entities raise money from the public. Why should the government be an exception?

Equally important, if a specific tax is levied for a purpose which is the responsibility of a government institution, a debate on what such institutions are doing with their funds is not just relevant but urgent. For instance, it is the responsibility of local bodies or municipal corporations to keep the area within their jurisdiction clean and they have the budget to deal with it. But what do we see? Garbage piled up throughout the city (and country) and people have to run here and there and get it done, sometimes getting the media involved. Why should we be asked to pay an additional 0.5 per cent service tax for what should have been done by municipal corporations as a part of their duty?

In 1994, when Surat was affected by a plague, the print business media asked this question of municipal budgets. Twenty years later, we have to ask the question again. Perhaps, we should have a body similar to the CAG for all municipal corporations, among the most insensitive institutions in the country. Every year the media, without fail, cover potholes just before and during the monsoon. Nothing has changed; the media keeps asking the question and the municipal corporation keeps going about its work as if nothing matters. The same is true of road repairs. It is so frustrating that the one institution that is responsible for much of our daily lives has such contempt for people and their lives.

The unfortunate part is that it has now become common (and fashionable) for governments and their agencies to ask citizens to get involved in something or the other. Now you have ‘Clean Colaba’ or ‘Clean this or that’ initiatives floating in the city. Or similar such programmes for other reasons – be it parking, vending zones, maintaining the status of no-development zones and so on. The list is just increasing.

The question is not whether citizens should get involved. Anyone even reasonably familiar with the lives of people would know what a tough task it is for many people to just survive the day. Some spend a major part of their daily lives in commuting. Where is the energy left for anything else but getting ready for next day’s grind? Isn’t it enough that we pay so many taxes? Can’t we ask for something in return? What is wrong with that question?