Budget 2020: Anti-people nature of tax collection and expenditure

A study of the budget documents reveals how anti-people is the taxation system in the country and even more anti-people is the way it is spent. Every service given by the government to people comes out of taxes paid by people. People pay tax every time they purchase a product or service. This indirect tax is built into the price paid. These indirect taxes are GST, excise duty and custom duty. Income tax is a direct tax based on the income of a person while corporate tax is paid by companies on their profit.

A break up of the total income including borrowings of the central government shows that all the indirect taxes together account for 29 percent (GST & other taxes -18 percent, Union excise duties – 7 percent, custom duties – 4 percent)  whereas the income tax accounts for only 17 percent. Thus, working people and toilers are contributing much more tax than rich. Yet year after year, income tax is reduced and indirect taxes are increased. The budget has planned for additional Rs 80,000 crore of GST collection from people by the central government alone in 2020-21.


The expenditure break-up is as anti-people. Subsidies account for only 6 percent of the total expenditure of the government yet there is constant demand for cutting them further.

The expenditure on heads which do not contribute anything to the welfare of the society – interest and defence – account for 26 percent of the total expenditure. These two unproductive expenditures take away 40 percent of total tax collection.

Over and above the expenditure on defence, the budget has allocated Rs 1.05 lakh crore for paramilitary forces and central police under the home ministry budget. Along with expenditure of Rs 4.7 lakh crore on defence, the total expenditure on this unproductive but oppressive head amounts to Rs 5.75 lakh crore. This should be compared with the budget allocation for health of Rs 69,000 crore and Rs. 99,000 crore for education and Rs 30,000 crore for women and child development for 2020-21.

The budget for Beti Bachao Beti Padhao scheme, focused on promotion of education of girls, has been reduced to Rs. 220 crore from 280 crore whereas the budget for the security of the Prime Minister is close to Rs 600 crore!

The largest parasitic expenditure is on interest payment to banks and financial institutions. The total interest payment will increase by Rs. 83,000 crore to Rs. 7,00,000 crore in 20-21. For making this interest payment and repayment of old loans, government will be borrowing Rs. 8,10,000 crore. The net amount borrowed will be Rs. 5,36,000 crore.

This cycle of borrowing to pay interest to banks and other financial institutions keeps repeating and growing while expenditure on basic needs of people keeps getting reduced year after year.


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