21.14        ndian     onom
     drive inequalities in health, education and across             kind of taxation could play a big role in
     the life chances.                                              this direction.
          The World Economic Forum’s Global Risks                   As in the latest Oxfam report (early 2017),
     Report 2016 (third time in series) has found ‘severe           India performs relatively poorly on tax
     income disparity’ to be one of the top global                  front. India’s total tax collections are at
     risks in the coming decade. A growing body of                  16.7 per cent of GDP while its potential
     evidence has also demonstrated that economic                   is about 53 per cent. Its tax structure is
     inequality is associated with a range of health and            not very progressive since direct taxes
     social problems, such as mental illness and violent            account for only a third of total taxes. By
     crimes. This is true across both rich and poor                 comparison, South Africa raises 27.4 per
     countries. Basically, inequality does not hurt only            cent of GDP as taxes, 50 per cent of which
     the poor ones but everyone.                                    are direct taxes. Though the Government
                                                                    of India has projected the share of direct
     seArching for the remeDies                                     taxes to improve to around 60 per cent
     But the question is whether inequality is inevitable?          of the total tax collections in the fiscal
     The answer is ‘no’. It is the result of policy                 2017-18.
     choices. Governments can reverse the situation of        (ii) Social spending: Governments’ spending
     increase in inequality by taking some important                on public services can do miracles in
     steps, such as rejecting market fundamentalism,                reducing inequality. In India, such
     opposing the special interests of powerful elites,             spending of the Governments is termed as
     and changing the rules and systems that have led               the social sector spending which includes
     to this situation. Governments need to implement               the fund allocations on education,
     reforms that redistribute money and power, and                 nutrition, food, sanitation, general
     level the playing field. There are two main areas              health care and social protection. Oxfam
     where changes to policy could boost economic                   has provided evidences from more than
     equality, namely taxation and social spending.                 150 countries (rich and poor) spanning
          (i) Progressive taxation: Progressive taxation            over three decades to show that overall
               method has been proved to be quite                   investment in public services and social
               effective in this regard. In this method             protection can tackle inequality. The
               of taxation corporations and the richest             group has for many years campaigned
               individuals pay more tax on their incomes            for free, universal public services across
               to the state. The increased incomes from             countries.
               tax on income enables the governments           As per the latest report of Oxfam, India
               to redistribute resources to the poorer     performs poorly on its social sector spending
               people across the society. Similarly, a     (centre and states put together). India spends
               better indirect tax regime can enhance      about 3 per cent on education and 1.1 per cent
               governments’ income in a big way—as is      (though this data has improved to 1.4 per cent by
               being projected out of the proposed GST     2016–17) on healthcare of its GDP, respectively.
               of India. The role of taxation in reducing  In comparison, South Africa spends more than
               inequality has been documented in           twice as much on education (6.1 per cent) and
               OECD and developing countries in a          more than three times as much on health (3.7 per
               very logical way by now. Thus, a required   cent). Though South Africa is more unequal than