Free healthcare for every citizen in the country! The very thought looks fascinating. Like all other dreams, a price will have to be paid for realising it. An expert panel of the Planning Commission considered the issue. The Government should introduce, according to the Planning Commission, a National Health Entitlement Card, which will guarantee to every citizen free access to a health package of essential primary, secondary and tertiary healthcare, fully funded by the Central Government, and covering both inpatient and outpatient services.

The Government would like to impose user charges in public hospitals to raise funds. The Planning Commission Panel does not like the idea of user charges. The funds required will be on a massive scale. At the moment, public spending on healthcare is just 1.4 per cent of the Gross Domestic Product (GDP). This should be raised to 3 per cent. The expert panel has suggested the levy of a surcharge for this purpose.

It estimates that a 1 per cent levy would yield approximately Rs 9,000 crore per year. We have an education cess, which brings to the Government coffers Rs 27,500 crore. Cess for construction of highways accounts for Rs17,700 crore. Surcharge on Corporation tax yields Rs 15,000 crore. The Centre also levies cesses and surcharges on tobacco, pan masala, salt etc. All cesses and surcharges yield in all Rs 79,000 crore. This will be approximately 8.5 per cent of total revenues. The proposal to levy additional cess for the National Health Scheme is under consideration of the Government.

India is collecting considerable tax revenues exceeding Rs 10 lakh crore. The advantage in collecting a cess is that it can be tied up to a particular cause, unlike other taxes, which go to add to the total budgetary receipts. There is no knowing how much of the tax revenues are properly utilised by the Government. How will the corporate sector take to the proposed new levy of a cess? It will certainly raise the tax rates and the question will arise as to who should bear the cess and surcharge.

THE GREAT TAX DEBATE

In the UK and USA, the debate is on. For healthcare purposes, should we tax the entire public or should the levy be confined to the better-off sections of society? Britain's top rate of 50 per cent is considered too high and there is a growing call for a rethink. Most countries in the West levy taxes higher than the Indian rate. The British Chancellor, George Osborne, insists that the 50 per cent band is a temporary measure and would like to position himself as an instinctive tax-cutter, though The Economist describes him as running one of the most punitive regimes for high-earners in Europe. President Obama had to enter into a compromise with the Republicans. Tax rates will not be raised further for the rich; instead Nearer home, the Philippines President advised revenue gatherers to defeat corruption and stretching of the fiscal limit. Government revenues as a percentage of the GDP will give an index of the taxable capacity of the nation.

INDIA'S PROSPERITY

Apparently, India's figures look much better compared to countries in the neighbourhood. But the question arises as to who pays India's taxes. Twenty years of reform have taken the country to a higher level of prosperity for the rich. The number of billionaires from India as per the Forbes rich list went up from 1 in 1990 to 49 in 2010. The GDP per person has more than doubled in this period, from $503 to $1265.

Our exports stand at 21.5 per cent today. Gross saving went up from 21.9 per cent to 34.7 per cent. The Tendulkar method of poverty rate shows a decline in poverty from 45 per cent to 32 per cent. These figures should set the policymakers thinking. The rate of 30 per cent income tax has been in force for nearly 15 years. If the healthcare programme is funded, care should be taken to see that it is levied and collected from crorepathis.

Warren Buffett wrote that he pays much less tax than some of his subordinate staff. Which Indian industrialist will have the guts to say that he is paying minimal taxes?

(The author is a former Chief Commissioner of Income-Tax.)

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