People’s Commission Calls For Urgent Tax Reforms And Reallocation Of Resources In Union Budget 2025-26

The People’s Commission has released a statement urging the government to adopt a more progressive and equitable tax structure in the upcoming Union Budget for 2025-26. The Commission calls for fiscal reforms that would prioritize social welfare and reduce the over-reliance on regressive indirect taxes, which disproportionately affect the common citizen.

The Commission has consistently raised concerns about the government’s strategy of selling public sector undertakings (CPSUs) and monetizing assets, which it argues is not a sustainable or fair approach to raise fiscal resources. Instead, the People’s Commission advocates for rationalizing the tax system to generate additional revenue, particularly by increasing the tax burden on big businesses, which currently benefit from significant tax sops and incentives.

An analysis of the 2024-25 Receipts Budget reveals that the current tax structure favors corporate interests over individuals. For instance, large corporations with profits exceeding Rs 500 Crore pay an effective tax rate of only 20.43%, while smaller companies with profits below Rs 1 Crore are taxed at a higher rate of 24.11%. This reflects a larger trend where corporate taxes have grown at a slower pace than individual income taxes, which have increased significantly in the past decade.

The People’s Commission highlights that this bias towards big business has exacerbated wealth inequality, undermining the Constitution’s Directive Principles, which call for reducing concentration of wealth and ensuring equitable economic development. As wealth becomes concentrated in the hands of a few, it distorts markets, inflates prices, and further marginalizes the public.

The Commission also criticizes the government’s continued reliance on indirect taxes like GST, which places a disproportionate burden on the poor, while corporate tax rates remain low. This disparity has led to a scenario where the government is taxing the common man more, while the wealthiest enjoy significant tax breaks.

The Commission calls for a shift in policy towards higher taxes on the wealthy, arguing that such reforms will not discourage investment but rather promote a more inclusive form of economic growth. The idea of “trickle-down” economics, they argue, has been proven false, as the benefits of high growth have not trickled down to the public in terms of improved human development or reduced poverty levels.

Further, the Commission expresses concern over the government’s continued privatization efforts, especially the sale of CPSEs, which they believe harms national self-reliance and disregards the social welfare role these entities play. The government’s push for large-scale privatization is viewed as a misguided attempt to raise funds for social programs, when more equitable fiscal policies could yield similar or better results.

In terms of social security, the People’s Commission points to a worrying decline in allocations for critical programs like food subsidies and the MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act). These reductions, they argue, demonstrate the government’s failure to fulfil its Constitutional obligations to ensure social security and welfare for all citizens.

In conclusion, the People’s Commission advocates for a comprehensive tax reform package that would increase taxes on large corporations, reduce subsidies for private businesses and ensure adequate funding for social security and public welfare programs. They urge all political parties to engage in serious dialogue on these issues to ensure that the Union Budget 2025-26 reflects the needs and aspirations of the common people.