View: How about thanking the taxpayer?

They argue that Telangana contributes to the central kitty much more than it gets from the centre, unlike states like Uttar Pradesh that get more via central tax devolution than they contribute by way of taxes to the central kitty.

The truth is, that the collection of taxes and the devolution of central monies is directed by the principles laid down by the finance commissions that are appointed every five years by the Centre.

The finance commission in turn distributes the central taxes largely (not entirely) on the basis of the population of states. Considering that southern states are economically more wealthy they tend to contribute more to the central tax kitty. (Delhi and Haryana are also big contributors)

However, when it comes to distributing subsidies and grants via PMGKY or MNREGS, northern states like UP get more because they are more populous and have a larger percentage of the economically backward population that needs subsidies.

Since people are taxed according to their capacity to pay and are provided subsidies as per their needs, southern states like Telangana tend to get less from the central kitty than they contribute. However, that’s as per principles of progressive taxation and social justice which no one can argue against.

But where does that leave us in terms of who the people of Telangana need to thank for their subsidies? My suggestion is why not thank the taxpayers? Whether the Centre is distributing subsidies or the state is subsidising education, both pay out of the taxpayers money.

Former British prime minister argued this point eloquently: “The state has no money other than taxpayers money,” she said, “.there are no public funds, other than taxpayers money.”

Reiterating the noble uses to which taxpayer money is put, can hopefully encourage taxpayers to not grumble about higher taxes and even to not try to evade taxes. It can also be used to sensitive bureaucrats to use public funds more diligently.

Maybe the country can use this slogan of thanking taxpayers to cultivate a sense of nation-building among the youth. Education in India is hugely subsidised by the state governments while Institutions like IITs and AIIMS are subsidised by the central government from its tax kitty.

Let every IIT graduate certificate carry a personal note from the dean telling the student that his graduation was made possible because the taxpayers bore over 65 percent of the cost, and hence the student owes it to the nation to repay his debt by various means, including paying taxes.

Not just the IITs, but school and university education is subsidised in most states. I remember, that my first month’s salary as a college lecturer was equal to the entire amount my parents spent on my college fees. With the second month’s salary, I had earned everything they spent on my school fees. I studied in a state-aided school where the fee for girls was Rs 5 per month, clearly hugely subsidised by the state. Likewise, our under-graduate fee was Rs 500 per term and post+graduate Rs 1500 per term. The fees, most definitely met only a very small part of the expenses on teachers’ salaries, the infrastructure of libraries, classrooms, electricity, laboratories. A lion’s part of the education bill was borne by the state government.

The point is in a poor country, those of us who are beneficiaries of subsidies, ought to be grateful to the entire collective- the millions of taxpayers and governments who subsidise education. It won’t be amiss if universities sensitised graduating students about what percentage of the cost of their education was borne by every common man and woman who paid goods and services (GST) on her soap and towel and tea.

Messaging on government subsidies can thus be turned into a powerful tool to restrain brain drain and nurture nation-building values. Credit Suisse, in a recent report, says that the percentage of tax to the gross domestic product (GDP) in the last quarter has risen close to that seen in 2008. We can buttress this trend by inculcating a sense of responsibility to the collective.

Alternatively, when taxpayers see a humble note of “thank you taxpayers” on ration shops or university degrees or even railway trains, it can hopefully inspire more honesty in paying our dues to the nation.