Tax Logic
Modern welfare states around the world tax their citizens in some way and use that money for government spending. The process of taxation shouldn’t feel burdensome to taxpayers, and the government must find a balance, or it could upset the entire economy. In federal systems like India, income tax is shared with the state governments, but the central government can use the funds however they see fit. They aren’t directly accountable to the citizens, and taxpayers don’t expect anything specific in return.
Governments use progressive taxation, meaning they charge the rich more, often through a surcharge. The central government doesn’t have to share this surcharge with state governments. Additionally, there are areas that need special attention, like environmental cleanliness, education, and health. To address these, the government can collect a "cess" along with taxes, which must be used only for the purpose it was collected for. The cess is not shared with the state government either.
By CA L.Muralidharan and CPA L.Mukundan
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