Xat

Just wanted to share a rad thought I’ve been mulling over the past few months. I’ve decided to call it xat (pronounced ‘ksat’: which is almost like mixing cat and sat into one word). Why xat? Because its the opposite of tax. (And sorry this has nothing to do with the MBA entrance tests in India, also called XAT)

All of us pay taxes. Not that as citizens of a nation/ state, we have much of an option. Some taxes are direct (eg: income tax) and some are indirect (eg: goods and services tax). My understanding of the concept is that you pay a portion of the value you create for yourself, back to the state because of two purported reasons:

a. It (the state) played a part in enabling you to be in a position to create value for yourself. It built the road, funded the school, laid the railway tracks etc that should have surely contributed to you being you. So pay-up for your past and present.

b. It wants to create more enabling infrastructure and conditions that would enable a lot more of its citizens to create a lot more value for themselves and those around them (and pay more taxes as well, in the future). So pay up for your future.

There are harsh penalties for not paying taxes as prescribed. There are even penalties for not filing your returns, even if one has paid all taxes and expects no returns! (I think that in the digital age, these routines must be done away with completely. They are a huge drain on a very precious resource: the productive time of productive people. Taxes could be deducted automatically, returns filed automatically and people only need to indicate exceptions, if any. Or, even as some opine, do away with direct taxes completely and have a simple indirect tax regime… But these opinions are way above my pay-grade and are what they are, mere opinions of a man entitled to some)

My purpose here is to highlight an imbalance of powers as it exists between the citizen and her state. This is something so obvious that it has been always ignored.

The simple fact is that there are no direct penalties imposed on the state when it does not do its part as stringently as when a citizen does not do her part. Here’s a simple example: I cannot travel on a particular road if I do not pay the toll-tax. However, I am not paid a rupee if the road has pot-holes!

Money being fungible, once the tax is paid, it just becomes money in the government coffers and our elected representatives are pretty much free to do whatever they deem fit with it within the bounds of law and the constitution. This link is not determinate. I mean, a political party may declare in their election manifesto that they would focus on a public cause X. Then when they come to power, they may present a budget to spend Y on X. But actually, due to myriad reasons, Z may actually get spent. Also, since a nation has a zillion points of expenditure, it may not be practical to even try and keep track of all of this as an individual citizen. What we get is roughly this:

So we roughly know that for every rupee that we pay on tax, x paise should get spent on a, y on b and z on c, for a given financial year.

However, the only way we can express our displeasure, pleasure or otherwise on the allocation, expenditure or its outcomes is through an aggregate electoral representation. We could either get our elected representatives to speak/ act for us or we could vote the incumbents out/ in depending on how we think they have performed.

Now notice how an individual action (paying taxes) for individual benefit (eg: establishment and maintenance of infrastructure) has remedies that are collective and have a very delayed or costly effect/ recourse (meet your rep/ wait for elections/ file a complaint/ lodge a legal case).

Let me recap. As a citizen I pay taxes. Determinate. Time-bound. Legally enforced. As a citizen, I expect certain minimum infrastructure; say, paved roads, water, electricity, public transport. If the government and the state machinery is unable to give me this, there is no determinate, time-bound, legally enforced and effortless counter routine.

Why am I highlighting this now? Let me explain. The infrastructure in this country, is far from adequate and we have developed a collective coping mechanism termed: kindly adjust. On the other hand we are in a state where a significant proportion of citizens have a digital financial identity. A tax paying citizen for sure has one. While this identity has traditionally been used to debit the customer, it is eminently possible and relatively trivial to do the reverse as well. Thanks to a robust inter-operable banking infrastructure that has come up here.

So we are now in a position where the state could technically be debited and a citizen credited in real-time if required. This is what I am proposing as Xat.

The other known instances of a similar monetary flow are either when you are a ‘beneficiary’ in a government benefits program or when you are owed a tax return. While the first is essentially a wealth redistribution program the second is a mere clerical adjustment for an imbalance in the information available to the actor and the state.

Xat seeks to be neither. It is intended to be a near real time penalty paid by the state to its citizens for not delivering on certain defined minimum that the citizen’s taxes should have delivered, had they been put to a proper use.

Here’s an instance. Imagine you are travelling in a car from location A to location B. As a citizen you are within your rights to expect a smooth road between these two points. Assume that your smart phone/ a special sensor affixed to the car can sense every time the road causes an unexpected level of vibration (pothole). Let’s say, it detected D meter aggregate bad road for the trip.

Now if the per capita spending on roads was X for the state and the total estimated road length is Y, as soon as the car reaches its destination, it submits signed digital incident artefacts to the Xat system along with location information. The Xat system calculates X*D/Y and credits it directly to your bank account, pushes you a notification and logs the incident.

As long as the shortfalls are quantifiable, the claimants identifiable and their act of availing a service verifiable, Xat should be applicable.

Say, a train you have booked a ticket for arrives late by T minutes. Garbage does not get collected from your neighbourhood for N hours. Police arrives M minutes late than their published response time after your phone call. Pollution level greater than L. Noise level>K in your residence. Street light not working for S stretch of road. No electricity for O minutes.

The idea is to kill the power asymmetry in the citizen-state equation by introducing instant monetary repercussions for inaction or inadequate action. I believe nothing would spur as much action as the sight of the treasury emptying itself!

Am also certain that even if the resource or service had been executed/maintained by a third party, the Xat must be paid directly by the state. Whether the state then recovers or remedies it’s shortfall from its contractors is purely it’s business.

Perhaps these Xats could be pulled off by the smartphones that most people carry nowadays. Perhaps they need a cloud of sensor networks. Maybe the system uses blockchain instead of central servers. Perhaps there are better quantification methods…

The point of this article was not to get into any specifics of an implementation. The intent was only to sow the seeds of thoughts on Xat into your minds. Because I think it’s time the humble tax met it’s match!

Of course I’m naive and foolish. So go ahead and critique my thought and punch holes in my logic. Or if you’re an app developer, could you make an app that quantifies your Xats? Just so that we have a sense of what this means?

What say?

obsessively compulsively creative. getting better every day.

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