Revoke anti-people Swachh cess

The imposition of an additional 0.5 per cent cess on services to support the prime minister’s Swachh Bharat programme is against the best principles of tax policy.

The main attributes of a good tax policy are fairness, simplicity and predictability. No one had expected the Swachh Bharat programme to be funded by a general cess. In fact, the government had given the indication that it would be funded by the corporates as part of their social responsibility. Now, it says the cess would increase people’s involvement in the programme. Involvement would better be ensured by other means than by making them pay. The cess would hurt people in many areas – when they travel, eat out, buy something or undertake many other common activities. Many would also wonder why they have to pay a cess when the government’s revenues are rising, there are big gains on the oil price front, corporate tax is reduced and when the prime minister himself says the government’s aim is to lighten the tax burden. He has offered lowering of taxes to businesses.

The proceeds of a cess would entirely go the Central government, as states cannot claim a share of it. The Centre’s tendency to impose cesses is increasing and this goes against the claim to promote good federal relations. There are many other existing cesses which include an education cess, a road cess on petroleum products and those on exports, clean energy etc. Together, they account for over Rs 1 lakh crore. The Centre has claimed that it has helped the states by accepting the Finance Commission recommendations for greater devolution of resources. But it has also reduced Central assistance to states and increased surcharges and cesses which are not to be shared with states. The Rs 10,000 crore which is to be raised with the latest cess will not go to the states, though the states and local bodies were considered to be main implementation agencies for the Swachh Bharat programme.

States have always opposed cesses, finances commissions have disfavoured them and the Comptroller and Auditor-General (CAG) has criticised them as non-transparent. The CAG has also noted that the utilisation of funds collected through cess has not been fully and properly reported in accounts. A cess is an ad hoc measure but most often, it becomes a permanent tax. All the cesses imposed in the last many years are still with us. Swachh Bharat may be a good programme, but it has not taken off in the last one year. It is not through an unwise and unpopular impost that it should be promoted.