Mess of the Cess

The Central Government raised the health and education cess to 4 percent from current 3 percent in its Union Budget for 2018-19. The additional cess will help the government raise another ₹ 11,000 crore that would be used to finance government-sponsored schemes in health and education.

The education cess was introduced for the first time in 2004 and was implemented at the rate of 2 percent from the fiscal year 2005-06. Over the years, the budgetary allocation to primary and secondary education has increased. The idea behind introducing the cess is to supplement the resources available for key social expenditures like education and now health.

Increased spending but where are the outcomes?

While there has been a marginal increase in enrolment ratios, the learning outcomes for children in government schools have not changed much. A 2015 study conducted by the Centre for Civil Society, a New Delhi based think-tank revealed that the bulk of the expenditure on education is being spent on maintaining infrastructure rather than improving educational outcomes.

CAG reveals the mess of the cess

As per a 2017 CAG report, the Secondary and Higher Education Cess (SHEC) that was introduced in 2007 and boasts of Rs 83,497 crore in collections between 2007 and 2016, was not allocated specifically for education. The Comptroller and Auditor General of India (CAG) could neither identify the schemes on which the cess proceeds were spent nor locate a designated fund in the government’s accounts for secondary and higher education spending. The Secondary and Higher Education Cess can only be called a sham.

Since there is no dedicated account to track where the cess collections are going, we can never be sure if the government would actually use the money to improve the health and educational outcomes for the people or use it to bail out Air India year after year. By collecting cess for education and health, the government abdicates its responsibility of providing education and healthcare from its general tax revenues and overburdens the taxpayers by levying yet another tax.

Public education and public health are services which enjoys wide public acceptance for a bigger role of the government. Indeed, this is what government leverages to levy these cesses. Saying that the general tax collections are not enough for meeting requirements for health and education suggests that the fundamental priorities of the government lie somewhere else.

This saga will continue if there is no transparent mechanism to ensure that the funds collected through cess will be spent on the original objective of the cess. Moreover, if the government can take a loan of ₹ 35,000 crore to buy its own company, why can’t it spend enough on education and health from its revenue accounts? Why should the taxpayers suffer the cost of government’s mismanagement? It is the time that we question the government to maintain its account in a transparent and responsible manner and stop asking us for multiple cesses.

READ MORE: HPCL-ONGC Deal – The Disinvestment That Wasn’t

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