The Power to Tax

A Fiscal Domain for Panchayats  is a curious title for a book which primarily deals with the taxation of agricultural income.  Of the nine chapters in Indira Rajaraman’s slim volume, apart from the Introduction and Conclusion, eight deal with different aspects of taxing the income from agriculture, including a land tax or land revenue.  On reading this book, one is left with the impression that a book on agricultural income taxation got linked somewhere along the line to a separate research project on the fiscal domain of panchayats.  However, the one chapter dedicated to defining the local fiscal domain, in India’s case the fiscal domain of panchayats, develops a compelling case for enhancing the panchayat’s power to tax, a case which is also reflected in the Introduction, the Conclusion, and of course the title. Perhaps the author too sees this chapter as the center piece of the volume. Drawing on the work of Wallace Oates and others, the author argues in this chapter that the local government is the appropriate level of government for providing local public gods such as rural road connectivity, rural water supply and sanitation, local watershed management, etc.