SUMMARY OF TAX DEVOLUTION.
Taxes in the union is like a vital organ in our body. Without it, we would fall. If we do not look after it, we will suffer. The tax system in India has always been a confusing one. The public neither knows who all is paying taxes nor where the taxes are going. Nothing is transparent. The horizontal devolution method of splitting taxes among states has stirred up controversy in the south, which is being allocated far less revenue from the union for ages. The critical factor in dividing taxes is population, and the north is far superior in that aspect. States that exercise birth control programs and achieve low fertility rates are rewarded with lower tax allocations, while the poorer, more populous northern states are gaining from this. Despite the latest addition of demographic performance (introduced in the 15th financial commission) or tax effort, most southern states have significantly lost out with an average decrease from 4.71% to 3.65%. In comparison, the north saw an increase of about 1.9%. When the 15th FC switched to the 2011 population data, the CM of Karnataka was unhappy with the decision. He even urged his neighboring state ministers to “resist” the change. Karnataka saw the most significant loss despite all efforts, with its shares being slashed from 4.71% to 3.65%. To conclude, the union needs to solidify a uniform tax division among the north and south or further divided among India’s two halves.
SUMMARY OF DEMOCRATS SPENDING PLAN
The democrats have aimed to collect 3.5 trillion dollars for their reconciliation package, which was a central plan of the Biden administration but are struggling to come up with a final bill. This ten-year spending plan targets improving education, healthcare, child support, infrastructure, climate change, among other goals. To achieve this mammoth sum, the democrats are putting forward a bill that updates the taxation amounts for individuals and corporates. The wealthiest individuals would see an increase to 39.6% and a 3% surcharge for all who earn over 5 million dollars and capital gains of 25%. The top corporates will see taxation of 26.5%, while those earning between 400,000 and 5 million would see a 21% tax levied. Those businesses making below 400,000 dollars would continue paying 18% taxes. This plan has an excellent scope for a better future for the country and the world. Prioritizing social development over economic growth has been a promise by the Biden committee, and it is great seeing them take up promising steps for the same. I can’t wait to see where this goes!
UNDERSTANDING POLICY CYCLE IN INDIA
Elizabeth Pappachan from IIT MADRAS has distinctly broken down the various stages policy goes through before being implemented. Before we get into that, it would be great to keep in mind the definition of public policy, by the author Dye, which goes by- ‘it is whatever the government chooses to do or not to do.’ The description clearly shows how the power is in the hands of the government. And so is the fate of the policies. Policymaking is a stringent process. a policy cycle is followed to achieve success. This cycle comprises six stages or milestones that are followed, targeting a smooth and public-friendly policy.
The first stage is the AGENDA SETTING stage, must or the discussion and debate on the topic brought forward. The ruling government pays attention to the requests and requirements of the issue. The plans are presented to the legislature and executive, who pass or dismiss the proposal, keeping the verdict parties’ ideologies in mind. This is one of the barriers people face in raising an issue. If the government in power does not agree with the intentions of the policy, be it a required one or not, they could simply push it aside. When governments switch control, the ideologies and scenarios change, giving a policy new hope.
The next stage is the POLICY FORMULATION or giving the policy a structure. Here, the goals are set, monetary funds are evaluated, positives and negatives and discussed, and stakeholders are established. In the plans, the public opinion and requests are examined or should be. In many cases, the external sources arent considered enough, leading to an imbalance in the aims. Expert views from each sector are considered, too, to ensure a solid foundation for the policy. This could also be considered one of the essential stages of policy formulation.
The third stage is ADOPTION of the policy. The centre or state governments discuss and approve one of the solutions, keeping in mind the financial requirements, public opinion, and an understanding between the state and the union.
The fourth stage is IMPLEMENTATION of the best fit policy. It goes as the name suggests, making sure the policy reaches everyone and is exercised successfully. For a smooth flow of this, a body would be set up to note down the progress of the policy and present it to the policymakers. This would be essential to ensure a transparent chain of command. The case in India is a bit different. Illiteracy, unaware citizens, lack of empowerment, and other such negatives impact the reach of the policy and might not reach those who need it the most. This could also be due to poor implementation of the government itself, poor awareness, inconsistency in practicing the policy, etc.
The fifth stage is EVALUATION. The policies would come with specific objectives. The governing bodies check the procedure’s progress concerning each checklist and revise how they achieve each goal. In our government, NITI Aayog keeps a close eye on these factors.
The last stage is the POLICY MAINTAINANCE stage. This gives the policymakers two options. Move ahead with the policy or terminate it. Both these depend on how well the policy is fairing in society. From all this, we can briefly understand the basics of this intricate system of policy formulation and implementation and learn the various steps we take to form a successful public policy.
References: https://edition.cnn.com/2021/09/12/politics/house-reconciliation-package-explainer/index.html. https://www.news18.com/news/politics/karnataka-cm-siddaramaiah-calls-on-south-leaders-to-uni te-against-financial-commission-recommendation-1697457.html
