Name roads, buildings after highest tax-payers for behavioural change: Economic Survey

For example, the top 10 highest tax-payers in a district can be recognized for the contribution they are making to government revenue.

From naming important buildings or roads after the highest tax-payers to putting up signals like “tax money at work” at construction sites, the Economic Survey 2018-19 has suggested measures to incentivize people to feel good about paying taxes. The aim is to leverage the behavioural change concept of the “nudge.”

The idea, according to the Survey, is to create exclusive membership of “clubs” that exude not only social status but also honour.(HT Photo)

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The Survey has pointed out that “perceptions of horizontal fairness suffer when the employee class is forced to contribute disproportionately to income taxes while the class of self-employed gets away paying minimal taxes,” potentially reigniting a debate about keeping the tax slabs of the self-employed and salaried at the same level.

For example, the top 10 highest tax-payers in a district can be recognized for the contribution they are making to government revenue.

“This may take the form of expedited boarding privileges at airports, fast-lane privileges on roads and toll booths, special diplomatic type lanes at immigration counters, etc, Further, the highest taxpayers over a decade could be recognised by naming important buildings, monuments, roads, trains, initiatives, schools and universities, hospitals and airports in their name,” it said.

The idea, according to the Survey, is to create exclusive membership of “clubs” that exude not only social status but also honour. This is based on the theory that people often engage in conspicuous consumption to convey their social status and so such steps can help propagate the social norm that “paying taxes honestly is honourable“.

Prime Minister Narendra Modi has talked about cracking down on the black money stashed away by dishonest individuals both inside and outside the country. In the last interim budget before the polls, the government offered tax sops to people whose taxable income is upto ₹5 lakh. But at the same time, the government is also keen on improving tax compliance.

The Survey suggested that Niti Ayog, the government think tank,set up a behavioural economics unit. It cited the examples of the Swachh Bharat Mission (SBM) and the Beti Bachao Beti Padhao (BBBP) initiatives that it said had “successfully employed behavioural insights” to bring about change.

The Survey said the success of SBM lay “is not only providing toilets but also in ensuring that these toilets are used. An independent verification of SBM through the National Annual Rural Sanitation Survey (NARSS) 2018-19 has found that 93.1 per cent of rural households had access to toilets, 96.5 per cent of the households in rural India who have access to a toilet use it.”

Saswati Bhattacharya, a sociology teacher at Lady Shri Ram College, said the idea of individual ownership of a public initiative in India had earlier been difficult to promote.

“This is because for far too long, the people have always worked with the implication that government will do everything for them or it is the government’s duty to fix things. But they didn’t realize that they too are a part of the system and they too, have the power and responsibility to fix things. Also, no government earlier ever tried to make the decision making process a collaborative effort,” Bhattacharya said.

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