TDR, Tax use discretionary right is a new idea and I believe that its first beginnings should be in India. In the system of a vast country like India and a three-tier government, this cooperative federalism based concept will strengthen grassroot level democracy and increase public participation in the financial administration of the country, people can fund their villages, cities, states, schemes of choice and government also can appeal to any particular scheme.
The Government of India should initiate a tax use discretion in their tax structure. Citizens Tax Use Discretion will be a direct financial partnership in citizen's democracy in the country with discretion and through this collection of tax will increase. Governments have the discretion about the use of the tax money which is deposited in the current tax structure now people can also have to a definite extent if its implemented. Governments distribute it in government schemes and expenses according to its discretion and while in said concept to a certain extent citizen also can have same right.
If the participation of citizen in distribution of tax money is increased, they will be allowed for a part of their own tax use and if they are allowed to finance their choice of schemes, then people will be happy to pay more tax and will more participate in tax structure of the country.
If the law provide that the citizen can spend 20% of his tax or any certain percentage on his own voluntarily in his local Panchayat or his choice of government’s schemes, and for this unlike deducting the expenditure from income which is currently in 80G section, can provide directly tax deduction from their tax liability, because ultimately it is being used where the collected tax was supposed to be expensed by the governments through their sole discretion.
Most beneficiary will be the panchayats whether it is a Gram Panchayat, Nagar Panchayat or a Municipal Corporation. The real purpose of the Panchayati Raj will be obtained and both Suraj and Swaraj concept will be in reality. The more fund for development of the town and the village will come from this system only. If a panchayat approves any development project in his assembly for its panchayat, then for them not necessary to only see the state finance or center finance for the fund, they can appeal to its citizens to use their tax discretion right and through this, they can collect the necessary funds.
If the citizen wants to develop some of his own panchayat project like construction of sewer system, park building, arrangement of drinking water etc., and if the work is approved by the general house of the panchayat, then the citizen himself, under his tax use discretion can contribute to their choice of plans. This formula can be tried at every level of Panchayat.
It is to be noted here that as a taxpayer, the limit for discretion should be only a certain percentage, such as if a citizen made discretionary income tax 5000 under tax use discretion but at the end of the year he was finally taxed by 10000 rupees and and the rate is 20% under tax discretion, then the 3000 extra paid should be made available to the government as a general fund and not a special fund under Tax discretion scheme or as per his own choice a personal contribution of Rs 3000 from taxpayers for that municipality or for that plan as he agreed. The Government can treat this extra contribution either as a general tax or exemption under 80G. If the cumulative contribution received under tax discretion scheme for that municipality goes excess from its estimated budget, then extra collection may then made available to the government again and government may put this amount under re-expenditure mechanism for the country with government’s own discretion.
In this way 20% or any such approved percentage tax will be spent on local panchayat or choice of scheme as per taxpayer and 80% will be spent according to the wishes of governments.
This system can be implemented in the indirect tax system GST too. Registered merchants should make a certain percentage of their choice, by paying direct payment to their favorite schemes of their panchayat, or of government schemes, being a part of GST Payment.
In GST, no case will arise to pay more Tax under discretion than his final tax calculation, because in GST , it is paid after tax calculation done by taxpayer, such excess contribution possibility arises in income tax only as its final calculation of tax and advance tax calculation may differ.
Since Citizens can invest in their desired government fund or scheme in addition to their panchayat project, to use this government also can appeal to citizen to use their Tax Discretion right for a particular scheme and can arrange the fund directly.
This plan will strengthen democracy to the last level and make the system accountable. The spirit of democracy will develop within the citizens. Right now the citizen could not ask for the responses and accounts from his chosen city representatives as he was indirectly participating in the funding of the city after this they can ask and more participate.
Earlier he used to make the tax deposited with state and central government through tax. The State Government and the Central Government then made a list of their priorities on their own level and then released the funds through the budget and this fund came through several channels and then came to the panchayat administration, which also has the potential for leakage of this fund. Even the citizens did not get that feeling that the things that are happening in the panchayat or in the country are actually being done by their own money. When there is a description of the work to be done directly with the money given by him, then they will remain aware from the account book to the quality of the work, the supervision of the spending system will increase, the corruption will end, because they will know that in such a task their own direct money is invested and they will be more aware.
He will make the officials and elected representatives responsible and themselves also will be accountable, they will know here that this money is not being given by the government, the money itself is their own money.
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