There is no denying that the demand for reduction in taxes is steadily growing louder. In fact, it has now put a big question mark on whether the Government’s projection of budget deficit over the years has been real or not. As yet another Budget is scheduled to be presented in less than eight weeks, the NDA Government needs to have a relook at the tax policy as well as the rationale for levying of cess.
At least the unspent budgetary amount and monies realized through various cess indicate that the Government is possibly levying many of these just for the heck of it. In fact, it has no requirement for this additional money.
The Comptroller and Auditor General (CAG) in December 2015 pointed out that over Rs 3 lakh crore collected through various cesses in 2014-15 have either been diverted to other causes than stated or simply remained unutilized. The total budget deficit for 2015-16 is Rs 3.94 lakh crore.
Similarly, the CAG had found in July 2015 that various Ministries, led by Health & Family Welfare, Agriculture and Human Resource Development, have released Rs 44,000 crore over the past few years without getting utilization certificates or accounts of grants given to statutory bodies and organizations, resulting in merrily spending without any evidence of gains to the beneficiaries.
Likewise, CAG since 2003 says the Central road fund created through the road cess of Rs 2 on sale of every litre of petrol or diesel has not been properly utilized. The CAG’s audit of 94 public-private projects (PPP) funded through road cess since March 2012 revealed that the National Highway Authority of India (NHAI) incurred a cost of Rs 857 crore due to changes in the scope of 23 projects, most of which were due to deficient detailed project reports.
Further, the total project cost (TPC) by developers also exceeded the number provided in the concession agreement, which increased NHAI’s risk burden. The report estimated the higher project costs adopted by concessionaires amounted to Rs 36,612 crore. The list of beneficiaries included Reliance Infra and Soma Isolux. Every year about Rs 20,000 crore is collected through the road cess increasing to Rs 43,100 crore in 2015-16.
According to the CAG, between 2002-03 and 2014-15, the telecom department collected Rs 66,117 crore towards universal service obligation (USO) fund but spent Rs 26,983 crore. The fund was set up to provide telephone connectivity and broadband services to rural areas. Despite tall claims, the State-owned MTNL and BSNL failed to achieve the target. The private providers achieved much of it without an additional financial support. This raises the fundamental question as to why such a fund was created in the first place.
Besides, over Rs 39,134 crore was not even transferred to the USO fund. It says that it might have been diverted for other purposes. The CAG could not account for where this fund was diverted. The mystery raises a moot question on the rationality of such a fund. Can Government finances be collected and squandered at the whims of some officials? It is amply clear that this levy on the people was uncalled for.
There is yet another five per cent R&D cess. It is required to be paid by importers of technology in India in terms of any foreign collaboration agreement for indigenous tech development. The Government collected Rs 4,900 crore as R&D cess between 1996-97 and 2013-14. A mere Rs 542 crore was utilised for the stated objective, says the CAG. What has happened to the rest of the fund – Rs 4498 crore – collected shockingly is unknown.
The education cess of 3 per cent collected from every income tax payee too has not met the objective it was meant for. Though compared to the others, it possibly shows a little better utilization. The scrutiny of accounts between 2004 and 2015 showed that as primary education cess Rs 1,54,818 crore was collected. Of this Rs 1,41,520 crore was transferred for spread of primary education through the prarambhik shiksha kosh (elementary education fund, PSK fund). However, it still made the CAG question the decision not to transfer Rs 13,298 crore towards development of education.
The secondary and higher education cess (SHEC) was introduced in 2006-07. The Government collected Rs 64,000 crore between 2006 and 2015. However, neither was there any fund for higher education like the PSK created nor was any scheme identified on which cost proceeds could be spent.
The CAG unhesitatingly states there is no transparency in utilization of the fund for the commitment of furthering secondary and higher education. It expresses apprehension over the possibility of diversion of funds for purposes not mandated under the Finance Act. This is a serious observation. If funds have been diverted as is obvious, the people have a right to know. It also reflects poorly on the Government’s functioning and its mindless way for collecting funds.
The above cases sadly highlight there is little or no concern for the taxpayer, who remains hungry to pay additional taxes to fill the government coffers. A country supposedly with severe resource crunch can hardly be so lackadaisical.
The other audit of the CAG pointed to over 43,000 utilization certificates adding up to Rs 44,000 crore which were due at the end of March 2013 being pending even 12 months later. The numbers would be much higher as at least 13 Ministries including Power, Panchayati Raj, Rural Development, Petroleum, Public Enterprises and Commerce and Industry did not or refused to share information with the auditor. Similarly, even five years after the Commonwealth Games, which was marred by spending-related controversies, 141 utilization certificates involving expenditure of over Rs 1,000 crore are still pending.
The way funds are being diverted or under-utilised raises serious questions on the budgeting and accounting procedures. Moreso, as there are 20 different types of taxes. This approach calls for a review of the entire array of taxes and cesses. It only lends credence to the fact that Indians are not only the highest taxed but also the most irrationally extorted. It is time the Government earnestly has a rethink on the many cess and taxes.
As mentioned many of these cesses are controversial. For instance, road tax is in addition to one-time parking charges and tolls paid for the purpose of road development. There is too much duplication. The nation should consider giving up road tolls that unnecessarily delay traffic, burdens people, causes corruption and leads to rising of prices. Speed breakers in the thinking process are indeed necessary. Countrymen cannot be taken for a ride. — INFA