Maximum Government Tax

‘Minimum government, maximum governance’ is very good on the ears, but four words strung together can either be a slogan or an ideology, and the only way to differentiate between the two is the deeds that politicians do. Minimum government, if not a slogan, has its merits. One, of course, being to keep the Government away from lives that can be run perfectly without its shadow. But also because the functioning of the Government comes at a price—pare it down, taxes come down, you and I have more to spend, money circulates and fuels growth in the economy. The Swachh Bharat cess, which came into operation on 15 November, is a direct antithesis to it—a not-so-clever ploy to make a quick buck towards ends no one is clear about.

If a businessman went to the equity market to collect Rs 4,000 crore citing nothing but good intentions, he would get Rs 0. The Government will get it because the tax payer has no choice. Swachh Bharat began as a campaign that would use the moral force of public spiritedness to make everyone come on the streets—something like an Each One Clean One, before passing the broom and building a chain that would make India look like a First World postcard. Even to those who were not cynics something was wrong when Hema Malini walked with a broom on the streets of Mathura not even bothering to make a pretense of using it. Or when in Delhi, trash was brought in so that a BJP leader could come later and sweep it away. Like so often in India, the natural journey of a farce is to become policy.

From a voluntary exercise that appealed to and aroused the social virtue of an individual, now it is a tax—a pure and simple coercion by the state because without the threat of punishment, which citizen would willingly pay anything? It is not even a fair tax. If you would, say, add 0.5 per cent to the upper and middle slabs of the income tax, then that would have been a progressive tax, even if you disagreed with the measure itself. This cess has been added on to service tax, which is ultimately collected from the consumer who already pays an income tax. The decision to use this mechanism is deliberate. It is easier to collect service tax and anything added onto an income tax is bad for the image and gets more angry noises.

The Swachh Bharat cess is yet another step on a slippery slope on which the journey began some years ago when the Government brought in an education cess. They have collected money to the tune of tens of thousands of crore, but no one really has a clue where it goes. Certainly not to government schools, if the state of affairs there are any indication. Minimum government is good because there is less to be accountable for. Why have extra cesses when the state collects direct taxes and should meet its expenses—cleanliness campaigns, education, nuclear bombs, etcetera— from them? Piling on such little loads complicates an already unwieldy tax system. Scandinavian countries take more than half a person’s income but citizens there don’t mind paying because they can see what they get in return including a clean country. Here every taxpayer feels that he is being extorted. Let’s have some maximum governance first before tampering with minimum government.

About The Author

Madhavankutty Pillai

Madhavankutty Pillai has no specialisations whatsoever. He is among the last of the generalists. And also Open chief of bureau, Mumbai  

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