Article to be attributed to Mr. Sanjay Dangi, Director – Authum Investment and Infrastructure Ltd., & Financial investor to many startups.
Lately I have been reading about Pigovian taxes – the idea that carefully designed taxes can have an impact on people’s behavior. These are often sin taxes – pricing bad behavior (like smoking or gambling) out of the market making the overall social cost very high. Thinking about it, I make 10 tax proposals for next year’s budget here. I know that it’s a far-off thing and you are still recovering from the breathless media coverage of the budget presented in February. But a budget takes a lot of planning, and I want to get my ideas in early.
- A 10% Pakora Tax
- Doubling GST on Loudspeakers
- A 30% Stunt Bike Tax
- A 10% Suit and Tie Tax
- A 20% Congestion Taxes
- A 100% Great Indian Wedding Tax
- A 20% Glass Building Tax
- A 100% Fairness Cream Tax
- A 28% Dog-walking Tax
- A 15% Adjournment Tax
A 10% Pakora Tax
Fat and sugar taxes aim to make a society healthier by taxing fatty and sugary foods extra. They have been tried in many countries with various levels of success. In India, Kerala has been the first (and so far, only) state to introduce such a tax, at 14.5%. With some studies showing obesity and diabetes rising in India, it is time to introduce this tax countrywide. Weaning people off excessive fried foods will not only reduce medical bills, but also save foreign exchange on imported palm oil (prices of which have skyrocketed this year). Ditto for sugary drinks and festival sweets.
Doubling GST on Loudspeakers
Recently there has been a lot of noise pollution about the noise pollution caused by loudspeakers. But we Indians love our noise – from deafening DJs at weddings to raucous processions. Banning loudspeakers will only put additional burdens on the overworked police. I instead propose that the 28% GST and 40.8% customs duty on loudspeakers be doubled – or even raised to 100%. The extra money can be used to hire more police, making our streets safer.
Sweta
A 30% Stunt Bike Tax
3 AM on our roads attracts a certain class of idiot – who either on his baap ka paisa or on udhar, buys a premium bike for racing and doing stunts. Somehow, they think that waking everybody up will impress girls. A Hayabusa will cost them more than a kidney, while a perfectly useful bike like a CD100 is beneath their contempt. A 30% tax will probably not deter them, but might pay for the government to install sound barriers on major roads.
A 10% Suit and Tie Tax
In 2009, Bangladesh banned suits and ties. They are ridiculously unsuitable for tropical weather like ours. People who wear them have to keep the AC on all day, and pour liters of deodorant on themselves. Both increase our petroleum import bill. To make matters worse, most of these are ill-fitted to our paunches as well. A 10% tax will curb the wearing of these suits, and offices can spend less on electricity. Those who do pay the tax will contribute to paying our oil import bills.
A 20% Congestion Taxes
American cities have been built around the car – with wide roads and ample parking. European and Asian cities, many of which are centuries old, were built around pedestrians with narrow streets and congested buildings. With greater prosperity, Indians have filled their cities with cars, so even the smallest towns today have traffic jams.
Many European cities have imposed congestion taxes and generally succeeded in freeing up the roads. We need to reclaim our cities for our communities and make travel easier for all. Congestion taxes also help pay for public transport – which we need a lot more of.
A 100% Great Indian Wedding Tax
Mehndi, sangeet, phere, reception, bidaai and countless other wedding-related functions keep our people away from workplaces for several days at a time. They also cause families to ratchet up huge expenses, often going into debt. This is simply because of peer pressure and keeping up with the Joneses.
I propose a 100% tax on weddings that exceed INR 1 lakh in expenses. Those who can’t afford them will have simpler weddings which are good for us all. Those who can pay for them will enrich public coffers. Many states have schemes to help poor women get married, and these taxes can help fund those schemes.
A 20% Glass Building Tax
Studies have shown that buildings with glass facades increase local heat and are contributing to climate change. The sun’s heat is reflected off the glass, so the building itself is not heated. But on a street full of buildings like these, the heat is trapped on the street, making a summer day unnecessarily hotter. These buildings also need to be air-conditioned because of the lack of ventilation, which causes a huge increase in their carbon footprint. Lastly – and this is my subjective opinion – these buildings are ugly.
A tax proportionate to their carbon footprint will make sure that the government has money to pay for offset measures. It can also help fund architectural research into alternatives that are more aesthetic and sustainable.
A 100% Fairness Cream Tax
I would daresay this is self-explanatory. Our daughters should not be hurting themselves because boys have been taught to expect gori-chitti brides.
A 28% Dog-walking Tax
More than dogs today, dog-walkers have become a status symbol. What productive employment this gives to young men and women, I have no idea. I propose that dog-walking be brought under GST at 28%, in the hope that it will make people walk their dogs themselves and thus get some exercise.
A 15% Adjournment Tax
Tareekh pe tareekh is how most people will describe our justice system. Here’s a small idea that may help to reduce the 44 million pending cases in India. Every time a lawyer asks for an adjournment, they must pay a tax on their fees, that they cannot pass on to their clients. Judges may waive the tax if they feel the adjournment requested is legitimate. This might incentivize both bar and bench to wrap up cases quickly – and help pay for hiring more judges in our understaffed courts.
Conclusion
Will taxation solve all the above problems? Not by itself. Daru-cigarette taxes have been around for decades – and work only partially. Governments have learned through multiple experiments that outright prohibition only cause people to buy tobacco and alcohol illegally – often causing ‘hooch tragedies’. However, such ‘bad behavior’ taxes are a more democratic way of bringing social change in a country that bans things at the drop of a hat, or enacts draconian laws that often backfire. Taxes preserve people’s ability to choose – even if it is bad for them. They make things look bad, but don’t criminalize the people who do these things. True social changes need public awareness and participation – and such taxes can help fund these campaigns.
There’s another benefit – both state and union governments can wean themselves off fuel taxes and give some relief to the common man. This is at a time when oil is taking a keen interest in USD 200 per barrel, and the public is looking for some relief from inflation.
Looking forward to budget 2023.
