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EDITORIAL

Tax Revenue for National Security

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Kumar Padmapani Bora
(The writer is Presently working as Deputy Commissioner of Income Tax, Guwahati. He can be reached at [email protected])

National security is a collective term that encompasses several dimensions starting from military advantage of a nation state over others to its survival through various means like arms race, diplomacy, economic power and many other forms of soft power. It is the highest order of protection of a nation state from external dangers as well as internal. Therefore, national security challenges can be broadly divided into two categories, domestic and external. The external security aspect cannot be delinked from domestic security. The term national security as a concept developed mostly in the United States in the post-World War-II scenario. The conventional definition of national security relied mostly on realist interpretation and it defines the term mainly from the military prospective. The international politics was considered to be a war game and it was a sort of maximization of power by the states through war, arms race etc. The non-conventional security threats and non-state actors remained missing in academic discourses and policy formulation. However, such sole focus on military might of a nation state started changing with the paradigm shifts in many spheres of geo-politics, economy, technology and culture after the World War-II. Since then, the concept of national security started including many other dimensions like energy security, environment security, food security, human security, economic security and more recently cyber security. The security threats are changing and there is an increased trend of limited and hybrid wars in the world politics.

India’s national security challenges are less conventional and they are more ambiguous. The country is having not only external threats but also facing various internal security threats like ethnic divide, regional disparity, caste atrocities, radical religious ideological divide, naxal extremism, separatist tendencies, insurgency etc. The root causes of such internal security threats are lack of development, inequal distribution of justice, narrow political motives, poor governance, unemployment, lack of effective participatory democracy.

So far as the external threats are concerned, the non-conventional national security dimensions did not receive much attention in India till the end of the 20th century. Until then understanding of India’s national security perspective was confined mainly to the threats modelled by its two neighbourhoods, Pakistan and China. Such external national security threats from Pakistan was meant to be dealt with through military means, whereas threats from China were dealt with through diplomatic engagement, trade, multilateral organisations and positioning forces across the borders. The threats like climate change, energy security, terrorism, communal conflicts, food security, cyber security etc. had started drawing attentions only from the beginning of the 21st century.

Whether it is to address the external or internal security threats, human resources and technology driven innovations are core factors for promoting national security. Military defence of country’s sovereignty from conventional national security threats too demands use of sophisticated technologies and for an effective national security set up, country requires huge investments of funds. Therefore, one of the important dimensions of national security is economic security. The importance of economic security has been acknowledged world over and its recent reflection has been seen in the new national security strategy declared by the US President Donald Trump in 2016 where he announced, “Economic Security as National Security”.Without funds it is hardly possible to develop technology, nurture human resources, develop skills, address issues of internal security, purchase of modern sophisticated defence equipment, deployment of arm forces and so on. It is the money that support national security order of a country.

A country’s money comes from revenues and government revenues are mainly of two types,- tax revenue and non-tax revenue. Non-tax revenue constitutes a very small portion of the total revenue, whereas maximum revenue comes from tax revenue. The tax revenue consists of direct taxes of income tax, corporation tax and indirect taxes like customs and goods and services tax. The collection of taxes depends on the health of the economy. The higher economic growth contributes towards higher collection of tax revenues. Economic slowdown adversely affects the collection of country’s taxes. When anticipated growth in tax revenue declines, the gap between revenue and expenditure rises and its results in fiscal deficit. In such situation,as short-term measures, a country starts cutting down public expenditures which further slows down the economy. It squeezes employment opportunities, access to basic health care, education and slowly supplies fuel to the non- conventional internal security threats. Lower collection of tax revenue may also compel a nation state to cut down its defence expenditure which would seriously compromise the nation’s capacity to meet the challenges of national security. Therefore, economic sustainability and growth are the key factors for greater national security. High growth enables higher expenditure on security and it in return ensures high degree of security.

One of the major factors which has been constraining India’s growth for a considerable period is lack of budgetary rooms for the government to raise public expenditures. Over the period, country’s capital expenditure has remained a very minimal percentage of the GDP and main cause for such lower amount of capital expenditure is the high fiscal and revenue deficit that India has been witnessing year after year. It is only when the country will have revenue surplus, it will be able to increase the amount of capital expenditure. The ideal situation for greater capital expenditure would be to limit revenue deficit to zero and fiscal deficit to 3 percent of the GDP. Greater capital expenditure would ensure inclusive development and better national security. Therefore, if India aims to be a comprehensive national power, its economy needs to be flourished with high growth and sound fiscal management.