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There has been a lot of buzz about the 'Drive Without Borders'
initiative in the social media for quite some time now. The initiative
has also got some coverage in the mainstream media. It all started with
the Government of Karnataka’s decision to crackdown on vehicles
registered outside the state but were plying on the roads of Karnataka
and were evading paying of taxes. There has been quite a bit of
discussion on why this crackdown is bad for a section of people traveling in or moving into Karnataka from other states, so I am not
going to discuss the same stuff here again. The focus of this post will
be to analyse the 'Drive Without Borders' initiative, from the
perspective of the federal setup of the Indian Union.
One
of the primary demands of the initiative is to have a uniform road tax
across India. On the surface, uniformity is appealing, but in reality
the world is diverse, non-uniform and colourful. So, what does a uniform
road tax mean to the states? As each state of the Indian union is
different, revenues and expenditures vary greatly from state to state.
It is the responsibility of the state governments to generate revenues
as per their planned or required expenditure, including spends on
primary healthcare and education, year on year. Apart from fuel, alcohol
etc., road tax is one of those few avenues from which the states
generate their taxes. So, any attempt to bring in a uniform tax system
will badly affect their revenues.
Let us say,
state A, as of today, stipulates 15% as the road tax to be paid. And let
us assume, this is overruled by the Indian Union’s uniform road tax of,
let us say, 10%. Now, this is will be a huge loss to the state's
exchequer. This will have a direct impact on many of the development
activities that the state may have planned to implement. Since such a
state will be short of money to fund its planned development activities
and other expenditure like those on education and health care, it is
forced to look for other options to raise revenue. Only way is to
squeeze more from whatever options that are left.
The
Indian Union, often referred to as a quasi-federal setup, has always
had a heavy tilt of power towards the Centre. States are usually at the
receiving end, and will have to operate in the limited space and revenue
avenues available to them. There lies the root of the problem. The more
you take away from them, the more they are forced to squeeze from the
available opportunities. Instead, let states have their say in more
subjects. This will only give them more space to plan out their
respective expenditures well.
This is not just
about revenue and expenditure but also about governance. A state with
heavy vehicle density, for example, may want to stipulate a higher road
tax to disincentivize individual vehicle buyers, encourage them to use
public transport and thus reduce congestion. If road tax were made
uniform, states will no longer be able to take such measures whenever
the situation demands.
There are other issues
that ‘Drive Without Borders’ have brought forth. Like, the refunds from
many of the state RTOs are tough to obtain. Also, many people think that
imposing a life time tax if the vehicles are in the state for a mere
30-day period, is too much. These concerns are quite valid and should be
taken up with the respective state governments, as roads are a state
subject.
A letter written to the Transport
Commissioner of Karnataka by the ‘Drive Without Borders’ team dated 28th
April 2015, which the author could get a copy of, highlights the plight
of people visiting the state for a short stay, and provides a few
suggestions to the Government to rectify the situation. They have also
added that they are with the Government of Karnataka to help curb the
‘menace’ of Pondicherry registered luxury vehicles that are evading the
tax.
Working with the state government is the
right approach, and helps the cause that ‘Drive Without Borders’ team is
working towards. However, trying to build a narrative to take away
states’ power to levy road tax will only work against the cause.
Many,
as expressed in some social media platforms, think it is discrimination
to have different laws and rules in a single nation. Some have even
gone ahead to call the different laws as racism. If that were the case,
the most liberal and democratic countries, especially in the West, will
have to be termed racist. For example, the USA has a much stronger
federal structure and road transport related laws vary from state to
state.
In a country of one billion plus population and so
much diversity, it simply does not make sense to have centralized laws
throughout. The many ills that we see today are rooted in the
centralized nature in which the Indian Union operates. Centralizing
further will only worsen the situation.
(Image source: The Hindu)
