There was a discussion somewhere about the AAP's work on education in Delhi. @[728586498:2048:Prakash] was upset that he pays a lot of income tax to the government, yet receives very little in return. Besides, plumbers and other helpers have been giving him a hard time with their tantrums. I wrote a long response, and @[773224539:2048:Sherebanu] wanted it turned into a separate post. Here it is:
1) There are certain things that are considered fundamental rights in law. In 2018, the Himachal HC reiterated that "Water and electricity supply form a part of right to life under Article 21 of the Constitution of India". Any government is within its limits to provide those services and items that the law considers essential to life, for free or at a subsidised price. These items include education, food, healthcare, roads, traffic signals, pedestrian crossings, footpaths, water, electricity, etc. Have you noticed that not just humans, even animals use roads. I've seen dogs use pedestrian crossings to cross the roads, once they learn that a zebra crossing is a safer place to cross from. Should we start taxing our four legged friends too?
2) The assumption that only the middle class pays taxes is a fallacy. This image https://pbs.twimg.com/media/DyTgTubUUAAjMHK.jpg will show you that only 17% of the central government's revenue comes from personal income tax. 21% comes from GST, 4% from customs, 7% excise, 21% corporations - all these are consumption driven. Do you think only the middle class consumes? Every time a poor child buys a packet of biscuit, or his father consumes desi daru, the government makes money. Simply because you pay income tax doesn't mean you are the only contributor of tax to the government.
3) You say you pay taxes but get no benefits. Let's look at the Delhi government's typical breakup of revenue and expenditure: http://bsmedia.business-standard.com/.../1488999991-4992.jpg . The highest expenditure is on education, which you may believe you do not benefit from. However, this head includes both school and higher education. So if you know someone who studied in DU, GGSIPU or other such Delhi based universities, there's your benefit. Also, if you employ someone who was educated at a government school in Delhi, and that person now uses their education in order to serve you, there, again, is your benefit. Do not forget that quality school education for free means that you do not indirectly have to pay for the school fees of the wards of your domestic servants and office/factory staff.
4) The RTE act dictates that private schools need to provide free education to the poor. Only those private hospitals that are built on government subsidised land need to provide free/subsidised healthcare to the poor. Guess what, almost every private school and hospital in Delhi is built on cheap land from the government. Isn't education/treatment of a few people fair rent?
5) My company employs a number of blue collar workers. I have a very healthy relationship with them. I also use the services of various kinds of handymen. I don't have horror stories to tell like you do. You live in Delhi, I live in Gurgaon, the world doesn't change that much in this short distance. Perhaps if you started treating workers with more respect, they will respect you back. That is all I can say. If you feel that the poor are blackmailing you all the time, perhaps your attitude to what is fair wages for their work is what needs to change.
I want to further elaborate on point (3). People believe that private education and healthcare are the best and cheapest. But that is not true. Almost every good higher education institution in India or abroad is publicly funded. So why can't public schools be equally good? In the US, they are. On the flip side, the largest private healthcare system in the world exists in the US. And we all know exactly how rotten it is.
The government can do an excellent job of providing high quality universal education and healthcare that is also very cost effective. In Delhi, Kerala, and many other states, this model is very successful. Now, we need to have 100% of our citizens educated and healthy. There is no alternative to that. If a government run model is the most cost effective, then what else will fund it but government revenues (taxes+others)?
And when we fund the free education and healthcare of others, we directly benefit in many ways. First, we are surrounded by healthier, more educated people. Who doesn't want that? Second, since education and healthcare are the biggest expense heads in most families (apart from rent, transportation, energy and food), making these heads free helps keep wages low. Who doesn't want to keep wages depressed? (Incidentally, the AAP is also chipping away at transport and energy).
Finally, when we pay for the education and health of our employees and their families through taxes, we actually spend less than we would if we included their expenditure on education and healthcare into the wages we give them. You may employ a maid, a driver, a car cleaner, a gardener, a cook and a security guard. When their wages include these expenses, all these wages rise. But when these expenses are met through your taxes, you only pay proportional to your income and your expense on taxable goods. As you age, your income falls, and you start living on your savings. Your expenses on goods and services falls. Your expense on wages rises, as you need more and more help around you. But the help is now cheaper as many of their expenses are being met through taxes, which you don't pay as much. Who is paying more taxes? As of this budget, the super rich are paying more. Those who consume more fuel are paying more.
Sigh. Economics is fun.
1) There are certain things that are considered fundamental rights in law. In 2018, the Himachal HC reiterated that "Water and electricity supply form a part of right to life under Article 21 of the Constitution of India". Any government is within its limits to provide those services and items that the law considers essential to life, for free or at a subsidised price. These items include education, food, healthcare, roads, traffic signals, pedestrian crossings, footpaths, water, electricity, etc. Have you noticed that not just humans, even animals use roads. I've seen dogs use pedestrian crossings to cross the roads, once they learn that a zebra crossing is a safer place to cross from. Should we start taxing our four legged friends too?
2) The assumption that only the middle class pays taxes is a fallacy. This image https://pbs.twimg.com/media/DyTgTubUUAAjMHK.jpg will show you that only 17% of the central government's revenue comes from personal income tax. 21% comes from GST, 4% from customs, 7% excise, 21% corporations - all these are consumption driven. Do you think only the middle class consumes? Every time a poor child buys a packet of biscuit, or his father consumes desi daru, the government makes money. Simply because you pay income tax doesn't mean you are the only contributor of tax to the government.
3) You say you pay taxes but get no benefits. Let's look at the Delhi government's typical breakup of revenue and expenditure: http://bsmedia.business-standard.com/.../1488999991-4992.jpg . The highest expenditure is on education, which you may believe you do not benefit from. However, this head includes both school and higher education. So if you know someone who studied in DU, GGSIPU or other such Delhi based universities, there's your benefit. Also, if you employ someone who was educated at a government school in Delhi, and that person now uses their education in order to serve you, there, again, is your benefit. Do not forget that quality school education for free means that you do not indirectly have to pay for the school fees of the wards of your domestic servants and office/factory staff.
4) The RTE act dictates that private schools need to provide free education to the poor. Only those private hospitals that are built on government subsidised land need to provide free/subsidised healthcare to the poor. Guess what, almost every private school and hospital in Delhi is built on cheap land from the government. Isn't education/treatment of a few people fair rent?
5) My company employs a number of blue collar workers. I have a very healthy relationship with them. I also use the services of various kinds of handymen. I don't have horror stories to tell like you do. You live in Delhi, I live in Gurgaon, the world doesn't change that much in this short distance. Perhaps if you started treating workers with more respect, they will respect you back. That is all I can say. If you feel that the poor are blackmailing you all the time, perhaps your attitude to what is fair wages for their work is what needs to change.
I want to further elaborate on point (3). People believe that private education and healthcare are the best and cheapest. But that is not true. Almost every good higher education institution in India or abroad is publicly funded. So why can't public schools be equally good? In the US, they are. On the flip side, the largest private healthcare system in the world exists in the US. And we all know exactly how rotten it is.
The government can do an excellent job of providing high quality universal education and healthcare that is also very cost effective. In Delhi, Kerala, and many other states, this model is very successful. Now, we need to have 100% of our citizens educated and healthy. There is no alternative to that. If a government run model is the most cost effective, then what else will fund it but government revenues (taxes+others)?
And when we fund the free education and healthcare of others, we directly benefit in many ways. First, we are surrounded by healthier, more educated people. Who doesn't want that? Second, since education and healthcare are the biggest expense heads in most families (apart from rent, transportation, energy and food), making these heads free helps keep wages low. Who doesn't want to keep wages depressed? (Incidentally, the AAP is also chipping away at transport and energy).
Finally, when we pay for the education and health of our employees and their families through taxes, we actually spend less than we would if we included their expenditure on education and healthcare into the wages we give them. You may employ a maid, a driver, a car cleaner, a gardener, a cook and a security guard. When their wages include these expenses, all these wages rise. But when these expenses are met through your taxes, you only pay proportional to your income and your expense on taxable goods. As you age, your income falls, and you start living on your savings. Your expenses on goods and services falls. Your expense on wages rises, as you need more and more help around you. But the help is now cheaper as many of their expenses are being met through taxes, which you don't pay as much. Who is paying more taxes? As of this budget, the super rich are paying more. Those who consume more fuel are paying more.
Sigh. Economics is fun.