Financial jargon simplified and contemplated on-
“Cess”
If just like me Cess is a new term to you, then read on, else skip to the contemplation part directly.
๐บ๐๐๐๐๐๐๐๐๐๐๐๐๐:
Cess is a form of tax levied over and above the base tax liability of a taxpayer imposed additionally when the state or the central government looks to raise funds for ๐ ๐๐๐๐๐๐๐ ๐๐ข๐๐๐๐ ๐๐ .
For example, the government levies an education cess to generate additional revenue for funding primary, secondary, and higher education.
Some examples of Cess-
- Education Cess
- Health and education cess
- Swachh Bharat Cess
- Krishi Kalyan Cess
- Infrastructure Cess
๐ช๐๐๐๐๐๐๐๐๐๐๐๐:
“๐ถ๐๐ ๐ ๐๐ ๐๐๐ก ๐ ๐๐๐๐๐๐๐๐๐ก ๐ ๐๐ข๐๐๐ ๐๐ ๐๐๐ฃ๐๐๐ข๐ ๐๐๐ ๐กโ๐ ๐๐๐ฃ๐๐๐๐๐๐๐ก, ๐๐๐ ๐๐ก ๐๐ ๐๐๐ ๐๐๐๐ก๐๐๐ข๐๐ ๐คโ๐๐ ๐กโ๐ ๐๐ข๐๐๐๐ ๐ ๐๐๐ฃ๐ฆ๐๐๐ ๐๐ก ๐๐ ๐๐ข๐๐๐๐๐๐๐.”
“๐ผ๐ ๐กโ๐ ๐ถ๐๐ ๐ ๐๐๐๐๐๐๐ก๐๐ ๐๐ ๐ ๐๐๐๐ก๐๐๐ข๐๐๐ ๐ฆ๐๐๐ ๐๐๐๐ ๐ข๐๐ ๐๐๐๐ก, ๐๐ก ๐๐๐ง๐ง๐จ๐ญ ๐๐ ๐๐๐๐๐๐๐ก๐๐ ๐๐๐ ๐๐กโ๐๐ ๐๐ข๐๐๐๐ ๐๐ . ๐โ๐ ๐๐๐๐ข๐๐ก ๐๐๐ก๐ ๐๐๐๐๐๐๐ ๐๐ฃ๐๐ ๐ก๐ ๐กโ๐ ๐๐๐ฅ๐ก ๐ฆ๐๐๐ ๐๐๐ ๐๐๐ ๐๐๐๐ฆ ๐๐ ๐ข๐ ๐๐ ๐๐๐ ๐กโ๐ ๐๐๐ข๐ ๐ ๐๐ก ๐ค๐๐ ๐๐๐๐๐ก ๐๐๐.”
Firstly, it’s not a permanent source, so unlike introducing any normal tax, which usually means a change in the law, introducing Cess is comparatively simpler.
Secondly, the fund can not be allocated for other purposes and is carried over for the same purpose compulsively instead.
The two statements mentioned above might make “Cess” a potentially powerful tool to leverage and raise money but also makes it equally risky.
Fundraised for a specific purpose might not be utilised in the expected timeline for variety of reasons and that causes a huge disruption in the flow of capital (which is its major strength) and also deteriorates with what is called “time value of money.”
๐ ๐๐๐ฉ๐ข๐ญ๐๐ฅ ๐ซ๐๐ข๐ฌ๐๐ ๐๐ซ๐จ๐ฆ ๐ก๐๐ซ๐-๐๐๐ซ๐ง๐๐ ๐ญ๐๐ฑ ๐ญ๐จ๐๐๐ฒ ๐ฆ๐ข๐ ๐ก๐ญ ๐๐ “๐% ๐ฅ๐๐ฌ๐ฌ ๐ฉ๐จ๐ฐ๐๐ซ๐๐ฎ๐ฅ” ๐ญ๐ก๐ ๐ฏ๐๐ซ๐ฒ ๐ง๐๐ฑ๐ญ ๐ฒ๐๐๐ซ.
Moreover, if the easier transfer of allocation is permitted, it makes it much simpler to raise large funds for one purpose, transfer the purpose, leaving some proportions in a conundrum.
With the amounts being massive– to give you a perspective– imagine what you can on your behalf and scale it up by a factor of 1.3 billion and that is huge already. Managing so much with a constrained yet efficient way is the challenge for you to contemplate on. (If we choose an unbridled way then making it fair is yet another challenge)
๐๐ก๐๐ญ ๐ฐ๐จ๐ฎ๐ฅ๐ ๐ฒ๐จ๐ฎ ๐๐จ ๐ข๐ ๐ฒ๐จ๐ฎ ๐ฐ๐๐ซ๐ ๐๐ก๐ ๐๐จ๐ฎ๐ง๐ญ๐ซ๐ฒ?
Keep Cess transferable? or Eliminate Cess overall and divert to increasing traditional taxes instead? or Would eradicate the 1-year rollover criteria?
Something I would do might seem out of the box, but use this as a pivot to create a bidirectional channel for tax.
What I mean by that is rather than trapping the capital, I’d somehow “๐ซ๐๐ญ๐ฎ๐ซ๐ง” (yes return) it in a case the purpose of Cess is incomplete or terminated altogether. Something like the Aadhar network can be utilised to keep a track and practically return it instead. Open to discussion for this.