Our Bureau

New Delhi , May 27

A CESS on all central taxes, including personal income, corporation, excise and customs duties, to finance universal access to primary education seems a certainty in the coming Union Budget.

The final Common Minimum Programme (CMP) document of the United Progressive Alliance (UPA), released here today, has made a mention of this, even though it has not specified the level of the proposed cess.

To get an idea of the amount that can be raised through the proposed cess, it may be noted that the Centre's gross annual tax revenues are in the region of Rs 2,50,000 crore.

A cess is basically a tax on a tax, similar to a surcharge, though the monies raised from the former are earmarked for designated purposes.

A one per cent cess, therefore, could potentially raise Rs 2,500 crore, while two per cent - the figure that is generally being talked about - would mobilise double that amount.

For income tax assesses who are being charged a marginal rate of 30 per cent, the effective rate after imposition of a two per cent cess would work out to 30.6 per cent.

If his annual taxable income is, say Rs 2 lakh, his additional burden on account of the cess would be Rs 500.

A small price to pay, perhaps, especially when he is assured that the revenues raised from the cess would go to finance universal primary education, rather than the salaries of government employees!

But then, the cess is to be imposed not only on personal income tax, but also on other central taxes, including on excise and customs duties. This would, in turn, entail, higher prices for the commodities - whether imported or domestically manufactured - that are consumed directly or indirectly.

The effective tax burden on the individual from the proposed would, therefore, be definitely higher than Rs 500 per year.

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