mid-day editorial: The stress over cess is justified

The introduction of 0.5 per cent Krishi Kalyan Cess – which was announced in the budget and takes the cumulative tax on services to 15 per cent – has been received with a lot of bitterness, especially by the middle class. A mere 0.5 per cent, which works out to 50 paise per hundred rupees, is not going to burn a big hole in anybody’s pocket. While nobody is grudging the small cess, what really seems to have riled the salaried middle class is the timing of the roll out.

The cess came a day after petrol price was hiked by Rs 2.58 and diesel by Rs 2.26, just two weeks after the previous hike. Then there was the increase of non-subsidized LPG cylinders by Rs 21. Capping it all, was the increase in aviation turbine fuel prices, which meant air travel will cost more.

Basically, in a matter of 24 hours, eating out, mobile bills, going to the cinema, air and rail travel, insurance, healthcare, banking and other everyday middle-class expenses became dearer. Also, when a salaried middle-class person sees her restaurant bill, she doesn’t see the 0.5 per cent cess increase. In her head, it is a rise in that service tax, which has gone from 12.36 to 15 per cent in a matter of months.

Another problem with such cess is the fact that they are well aware that almost half of all cess collected in the last decade or so has not even been utilized for the purpose it was earmarked for. For instance, the average Mumbaikar knows she has been paying a comical 15 paise surcharge since 1971 for the relief of refugees from the Bangaldesh War of that year.

Thus, the middle-class feels that its anger over such cess is justified. The trouble is, the government doesn’t seem to think so and the burden on the middle-class will only increase once the Goods and Services Tax is introduced, something Finance Minister Arun Jaitley said on Thursday will be rolled out next year. One can only hope that the government revisits the numerous cess and charges and sees how much of it can be eliminated before the final figure is arrived at. The middle-class, after all, is one of its biggest vote banks.

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