Strive for Justice: Rational Spending and Tax

Peace within any community is not an accident—it is the natural result of justice. One of the oldest principles of justice, suum cuique (“to each his due”), teaches that social harmony flows from fair distribution and responsible governance. Justice is not confined to courts or criminal law; it permeates the very structure of how a State collects and spends public resources.

Public Finance as the Backbone of Collective Life

Every community requires resources for its functioning. These resources fund infrastructure, public order, welfare measures, regulatory institutions, and the many functions that sustain civic life. To meet these expenditures, the State draws upon contributions from its members—taxes. When public expenditure exceeds tax revenue, the shortfall is financed through public (fiscal) debt.

Taxation, expenditure, and borrowing together demand a stable and accountable system of financial administration. At the heart of this system lies the budget—the formal instrument through which the State presents its expected income and expenditure and seeks the approval of the legislature. The budget is thus not merely a financial statement; it is a constitutional tool of responsibility and transparency.

The Constitutional Architecture: A Deliberate Balance

The Indian Constitution exhibits remarkable foresight in how it structures public finance. The Seventh Schedule is not simply a list of legislative subjects; it is a blueprint for a disciplined and just financial order.

The Constitution first lists the subjects on which the State may legislate and incur expenditure:

• Entry 1 to 81 of List I,

• Entry 1 to 42 of List II, and

• Entry 1 to 43 of List III.

These entries define the purposes for which public money may legitimately be spent.

Only after these appear the entries relating to taxation:

• Entry 82 to 96 of List I,

• Entry 43 to 66 of List II, and

• Entry 44 to 47 of List III.

This sequencing is not incidental. It is a deliberate design inherited from the Government of India Act, 1935, and adopted with minimal debate by the Constituent Assembly, whose members fully understood its significance. They recognised that expenditure—the legitimate functions of the State—must define the scope of taxation, not the reverse.

Within this framework, fiscal power is not an unfettered sovereign prerogative but a constitutionally structured function. When legislative subjects are precisely delineated, public expenditure must remain anchored to those subjects. Rational and disciplined spending naturally limits the tax burden placed on citizens. Fiscal discipline, therefore, is not merely sound economics—it is a constitutional requirement essential to a just and peaceful society.

Direct and Indirect Taxes: Two Paths to Revenue

Taxes may be collected directly—from individuals and entities—or indirectly, through intermediaries involved in the supply of goods and services. Each form of taxation carries its own economic effects and social implications. Both, however, must be administered within the constitutional boundaries that safeguard fairness and prevent arbitrary exaction.

A just tax system ensures that contributions demanded from citizens correspond to legitimate public purposes and are imposed within the limits of constitutional competence.

Tax system as a moral system

This constitutional philosophy is not unique to India. Across civilizations, legal and moral traditions have linked taxation to justice. In Islamic jurisprudence, for instance, Zakat serves as a prime example of taxation tied expressly to socio-economic fairness. As both a wealth tax and an income-linked levy, Zakat is designed not merely to raise revenue but to redistribute resources ethically.

Such traditions underscore a broader truth: tax systems are moral systems. They reveal what a community values and how it pursues fairness.