“No Taxation without representation” is a popular slogan that has played a key role in the freedom movement in India and The United States of America. This slogan indicates the relationship between the State, citizen and taxation. According to J.A.Schumpeter, “the process of demanding political influence in return for taxation, led to the development of a tax state. In a tax state, Taxes were no longer raised merely for the purposes for which the prince had asked them, but also for others” . Hence, establishing the legitimacy of taxation in the welfare provided by the government. 

The Constitution of India envisaged the role of the State as a welfare state. Part IV, Directive Principles of State Policy, of the Indian constitution imposed the responsibility on the State to ensure economic equality and justice for all. For this, the government  is empowered to administer taxes and undertake a welfarist role. However, today when India is celebrating its 75th year of Independence, ‘welfare’ is being painted as Revadi (freebies) and the lives of poor citizens is being burdened by regressive ‘taxes.’

The increased dependence of the government’s taxation policy on indirect taxation (which is regressive in nature) is well documented. Adding to this, inflation acts as another hidden tax on the poor and middle class citizens. To cite an example, in February 2019, when the Government introduced the PM KISAN scheme of 6,000 cash benefit to farmers. At that time, the price of the Diesel was at Rs. 65/litre. Today it has crossed Rs.90 in most states. Therefore, fuel inflation devoured the cash benefit provided by this scheme to farmers. The hidden tax of inflation often invites significant public debate. However, going beyond inflation, I would like to argue the other hidden charges and taxes that people are paying. 

Beginning with the roads, it is understood that roads are a public good. However, basic services have recently been made chargeable, thanks to privatisation and Private-Public-Partnership (PPP) models. Taking an example of toll plazas can show the gross impact much clearly. On an average, one toll plaza is crossed every 60 kms when traveling from Jammu to Kanyakumari. This translates to 59 toll plazas every 3,430 km. The toll for cars would cost  Rs.5000, while for a seven-axle vehicle it would be Rs. 30,700. In FY 2022, Government mopped up 35,000 cr as the toll tax. This is projected to grow further in 2025, going up to 1.34 lakh crore per annum.

Secondly, the diversion of funds originally meant for the roadways to other sectors is an implicit fiscal burden. In Year 2000, the Government enacted the Central road fund act ( CRF). Initially, it imposed a cess on petrol and diesel to fund the construction and maintenance of the road. In 2018, it was amended as the Central road and infrastructure fund (CRIF). This amendment opened gates for such funds being utilized for schemes related to water and sanitation, communication, social infrastructure etc. Here is the proposed expenditure from CRIF funds for the year 2022-23. It can be seen that these range from the Jalto Jal Jeevan mission to the Ayushman Bharat scheme.

In other words, the road cess which was intended to fund the construction of the road is being diverted to other projects. Meanwhile, citizens are being charged for the road via toll tax as well. Furthermore, now the government aims to generate Rs 1.6 lakh crore through the Toll Operate Transfer (TOT) Model by monetising public highways as well. This will further add up the toll tax burden on citizens

In the 2020-21 Budget speech, the finance minister announced a public-private partnership (PPP)-based smart cities, railways, and warehouses, amongst others. PPP-based infrastructure, user charges and cess — the financiers of “new India” — have established a parallel framework to raise revenue and are likely to impose a fiscal burden on citizens.  When citizens pay municipal tax, the municipality is supposed to ensure cleanliness and sanitation facilities. But the Ahmedabad Municipal Corporation (AMC) introduced a “User Charge” of Rs 365 per household to make the city clean, which is 15% of the municipal tax amount.

Discriminatory practices of the administration also impose fiscal costs on the poor and middle classes of society. Administration allows cars to be parked on the road with impunity, but if two-wheelers are parked on the road, they get towed. 

Such practices pushed bike owners to park their vehicles in pay-and-park spaces, while car owners have the luxury of parking on the road without paying anything.

India stares ghastly at the massive income inequality in the country today.  Oxfam observed in its 2021 report that 73% of the wealth generated in India in 2017 went to the richest 1%, while 670 million Indians who comprise the poorest half of the population saw only a 1% increase in their wealth. While lacking in nuance, these broad statistics are a reflection of the result of years of unequal treatment meted out to different classes of citizens by the government.

For example, after Covid, railways withdrew ticket concessions from senior citizens. One can question the government on continuing the quota system for Members of the parliament, however, that can be left for another day. The railways don’t even cater to the needs of the people in terms of drinking water.

Poor water drinking facilities remains a common complaint of rail travellers. To address this issue, railways introduced pay-and-drink water vending machines. Again, this imposed a fiscal burden on citizens. People are paying extra to get access to drinking water on top of the railway fare, and the rail ministry earns from the license fee of these machines.

It is said  that when people take the ownership and responsibility of the public space, people become citizens. But when the state monetises the public asset, it weakens the state-citizen relation. With much celebration, Prime Minister Modi recently  inaugurated the foot over bridge named “Atal Bridge”  on the Sabarmati river of Ahmedabad. The AMC fixed the fee of Rs.30 for a 30-minute walk . This equals to Rs.1 for one-minute access. This is a many times more than the minimum wage that a labour earns per minute in Ahmedabad. Even for attendance in events that are held for the celebration of the Republic, the people have to pay fees to sit in the Republic day parade at Rajpath .

I would also like to argue that hidden charges and unequal treatment do not necessarily have to be monetary . Often the colonial styled bureaucratic practices, intentions of the administration, shifts in financing patterns etc are imposed as hidden costs on the common citizen.

To cite an example, In a Scheme named FAME India, the government provides 15-20% ‘incentive’ to purchase e-vehicles. In the PM KUSUM scheme, the government provides a ‘subsidy’ of 30% to farmers to install solar pumps for irrigation. In FAME India which is basically targeted towards the middle and rich income groups, government provides a subsidy on 6.5 lakh e vehciles against the target of 10 lakh e-vehicle . On the other hand, in PM-KUSUM, the Government of India envisaged to install 20 lakh stand alone solar pumps and has installed only 79,000 pumps in years. The lax attitude of the government is noted in the Parliament’s Standing Committee report,

“The Committee is extremely disappointed with the dismal performance of the Ministry under this scheme” .

An example for shifts in financing patterns can be analysed by looking at the  health and education sectors. Instead of being funded by reliable sources like the gross budgetary support, has lately been made dependent on non-budgetary sources like CRIF, Higher education finance agency (HEFA) and the NIF (Disinvestment Fund). This change may seem irrelevant today, however it will surely create additional fiscal burden on citizens in the future.

HEFA, a non-profit non-banking financing company provides loans to public educational institutions at the interest rate of 7-8%. The government pays the interest, but the principal is paid by the older institutions themselves. Older institutions have raised Rs. 3,338 crore via HEFA loans, and they have to repay this from their internal sources that will mostly rely on the college fees . In future, HEFA aims to mobilise one lakh crore - a huge amount which may lead to an increase in the cost of public education

In recent years, AIIMS has been majorly funded by the NIF and HEFA. For example, in the year 2021-22, 3658 cr was spent by various AIIMS and only 10 crores came from the gross budgetary support. The story is of Pardhan Mantri Swasthya Suraksha Yojana is similar. It is a scheme aimed to construct new medical colleges and AIIMS in India. In the year 2021-22, 7400 crores were spent, but less than 50% of the total, only 3250 crores came from the Gross Budgetary support.

The nomenclature of the government policies reflects a discriminatory  approach. When governments provide fiscal help to the poor, it is called “revedi” but the same offered to the rich is termed the lucrative “incentive”. Posters for free or subsidised food to the poor are ubiquitous across India, but there are no public posters screaming about the Rs. 1.97 lakh crore incentive given to the corporate sector under 13 PLI schemes.  In the name of transparency, the Government uploads the personal details of each MGNREGA worker on its website; but the same Government does not disclose the names of businesses that have claimed incentive or the names of the wilful bank defaulters. 

The subject of wealth equality is not limited to the Forbes billionaire list or the Oxfam report. It has serious consequences in the economy, politics and in society. Economic inequality played a major role in the French Revolution to the Arab spring to the Britain vote for Brexit. It impacts the day-to-day life of the all. Richard Wilkinson and Kate Pickett in their study shows that the social  problems of drug menace and increasing crime rate, health problems like obesity and  mental illnesses are directly linked to economic inequality. It is not just a coincidence that the economically equal society of the Nordic countries ranked top in the Human Development Index to the Press Freedom Index to the Innovation Index. 

Nevertheless , there is no dearth of solutions provided. Scholars like Thomas Piketty and institutions like Oxfam have also suggested ways to make societies economically equal. In India, political will is also not an issue. A government which can take decisions like demonetisation has ample will to take strong action. What it lacks is the intent. Members of Parliament who are our policymakers do not truly represent the voters. While 80 crore Indians cannot afford even two meals a day, more than 80% of the Lok Sabha MPs are crorepatis. The need of the hour is to inculcate the idea of both Gandhi and Ambedkar to make India economically equal and prosperous. 

Mahatma Gandhi

Economic equality is the master key to non-violent independence. 

B.R.Ambedkar

On the 26th of January 1950, we are going to enter into a life of contradictions. In politics we will have equality and in social and economic life we will have inequality. In politics we will be recognising the principle of one man one vote and one vote one value. In our social and economic life, we shall, by reason of our social and economic structure, continue to deny the principle of one man one value. How long shall we continue to live this life of contradictions? How long shall we continue to deny equality in our social and economic life? If we continue to deny it for long, we will do so only by putting our political democracy in peril.