What are direct and indirect taxes, in your opinion? Explain why indirect taxes are viewed as regressive and direct taxes as progressive, using examples.
Gender Budgeting refers to integrating gender perspective in preparation, analysis and assessment of budgets and policies and translating gender commitments into budgetary operations. It is put into use by embedding gender-specific goals in fiscal policies by emphasizing on reprioritization rather tRead more
Gender Budgeting refers to integrating gender perspective in preparation, analysis and assessment of budgets and policies and translating gender commitments into budgetary operations. It is put into use by embedding gender-specific goals in fiscal policies by emphasizing on reprioritization rather than an increase in overall public expenditure or creation of a separate budget. It aims to achieve gender mainstreaming in legislation, policies and programmes to ensure that benefits and development reach women.
Significance of gender budgeting in India:
- It increases transparency and accountability of the budgeting process, as it highlights the proportional expenditure on both genders and the method/process of the expenditure.
- It will help in achieving SDG-5, related to achieving gender equality and empowering all women and girls.
- Special attention would address female’s vulnerabilities and provide them access to resources and improve their performance on social indicators like health, education etc.
- Conscious efforts to create economic opportunities for women can help increase the female workforce participation rate, which remains low and consequently boost GDP.
- Integrating gender perspective into macroeconomic policy improves equity of the overall budget process.
The Centre and states have taken various steps to adopt gender budgeting, such as:
- The first significant attempt at making gender-sensitive resource allocation was the “Women’s Component Plan” (WCP) as a part of the Ninth Five-Year Plan (1997-2002), which earmarked 30% of developmental funds for women under various schemes of ministries/departments.
- India adopted the WCP as a budgetary strategy in 2004-05 and since then it has been institutionalized in the annual budget by incorporating the gender budget statement. This statement highlights the annual budget allocation for welfare schemes for women by categorizing them as “Women-Specific Schemes” (100% fund allocation for women) and “Pro- Women Schemes” (where at least 30% of the allocation is for women).
- A Gender Budgeting Secretariat has been placed in the Ministry of Finance, and central ministries and departments have been mandated to set up gender budgeting cells to initiate and take forward the gender budgetary strategy.
- The Ministry of Women and Child Development has come up with guidelines for integrating gender budgeting into beneficiary-oriented schemes.
- Many states and union territories such as Rajasthan, Gujarat, Karnataka, Kerala, Andaman and Nicobar islands, Dadra and Nagar Haveli etc. have taken significant steps to institutionalise gender budgeting.
Apart from these, there is a need to significantly increase the budgetary allocation for women, as funds allocated for Gender Responsive Budgeting are approximately 5% of the public expenditure and less than 1% of GDP. Further, careful analysis of gender-oriented schemes before launching and post implementation would go a long way in curbing gender inequalities and contributing to the overall development.
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Direct tax is a type of tax where the incidence and impact of taxation fall on the same entity. In the case of direct tax, the burden cannot be shifted by the taxpayer to someone else. Income tax, corporation tax, property tax, inheritance tax and gift tax are examples of direct tax. Indirect tax isRead more
Direct tax is a type of tax where the incidence and impact of taxation fall on the same entity. In the case of direct tax, the burden cannot be shifted by the taxpayer to someone else. Income tax, corporation tax, property tax, inheritance tax and gift tax are examples of direct tax. Indirect tax is a levy where the incidence and impact of taxation do not fall on the same entity. The burden of tax can be shifted by the taxpayer to someone else. It is usually imposed on a manufacturer or supplier who then passes on the tax to the consumer. It is imposed on a product or service. Indirect tax has the effect of raising prices of products on which they are imposed. Goods and Services Tax (GST), customs duty etc. are examples of indirect taxes. Direct taxes are considered progressive because the government can impose a lower tax rate on low-income earners compared to those with a higher income. That means in direct taxes, it is possible to impose higher taxation rates for the rich and lower tax rate for the poor. It reduces the tax burden on people who can least afford to pay them and takes a larger percentage from high- income earners. For example, personal income tax in India has a higher tax rate for higher income slab. Indirect taxes are considered regressive in nature as they are applied uniformly to all taxpayers, regardless of their income level. For example, same rate of taxation is applied in case of GST, an indirect tax, on the same amount of goods or services purchased. If two individuals buy the same amount (say a packet of biscuits), both have to pay the same amount of tax. The GST, in effect, constitutes a higher percentage of the lower-earning individual’s wages and a lower percentage of the higher-earning individual’s wages. In this way, direct taxes facilitate higher burden of taxes on the rich acting as a tool of redistributive justice while indirect taxes affect the poor more. Therefore, increasing the indirect taxes is considered as a regressive step while imposing direct taxes as per income level of the taxpayer is considered as progressive tax.
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