New Delhi: There is growing discussion around the introduction of a “vaccine cess” in the Union Budget to fund the rollout of the Covid-19 vaccine at a time when revenues are under strain and there is growing demand for funds, including for higher defence allocation.
With the economy showing signs of returning to normalcy, things have started to brighten on the revenue side, after the lows of the first quarter, but the government is going to close the year with a lower than budgeted tax mop-up.
There is pressure on resources amid demands for higher spending to rev up economic activity, especially in infrastructure and other job-generating sectors.
The Centre has also decided to bear the burden of the vaccine bill, at least in the initial round, resulting in additional pressure on finances. Certain estimates have pegged the vaccine bill at over Rs 60,000 crore.
The initial order of 11 million shots, for which orders have been placed, is estimated to cost around Rs 220 crore and will be funded via PM Cares Fund.
During lockdown, there had been suggestions, including from tax officers, to impose a cess or a surcharge on income to fund the tax deficit but the finance ministry had dismissed them, arguing that it was not the right time given the drop in income levels.
With economic activity resuming, a section in the government and tax consultants are not averse to a small levy in the name of vaccines.