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Coming, social security tax

The proposed tax is meant to look after the welfare needs of workers in the unorganised sector, reports S Patranobis.
Hindustan Times | By Sutirtho Patranobis
UPDATED ON JUL 14, 2007 02:17 AM IST

An across-the-board social security tax has been proposed by the National Commission for Enterprises in the unorganised sector, the government-appointed advisory body and watchdog for the informal sector. The proposed tax is meant to look after the welfare needs of workers in this sector.

The proposal is part of two draft bills, which for the first time separately cover workers in both agriculture and non-agriculture sectors, submitted to Prime Minister Manmohan Singh earlier this week.

The commission has also recommended that the government notify a ‘National Security Scheme’ for the unorganised sector. The security scheme should be implemented on a statutory basis, which means it should be backed by legislations, it has proposed.

The social security tax would contribute in mopping up an estimated Rs 19,431 crore to cover agricultural workers and Rs 12,954 crore to cover the remaining workers. “All central trade unions have agreed to the tax, provided it is across-the-board and covers the corporate sector as well,” Dr Ravi Srivastav, commission member and co-author of the bills, told HT. “Across-the-board would imply the tax will not only be levied on salaried individuals but also on business houses.”

Srivastav said it has been suggested that workers below the poverty line need not contribute. “Their social security should be taken care of through central assistance. For above-BPL workers, we suggested a three-way contributory scheme; from workers, employers and the government,” he said.

In the unorganised sector, 18-20 million workers (5-6 per cent) are covered by schemes or plans implemented either by the government, employers or NGOs. The rest, about 30 crore workers, have no social security cover.

The commission proposed separate bills for agriculture and non-agriculture workers because of the distinct nature of problems faced by them. The UPA’s National Common Minimum Programme also talks about two separate bills.

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