A Tax Policy to Address Overpopulation While Balancing the Sex Ratio in India

Abstract

In response to the limited success, 600 cases filed with 20 convictions over 15 years, of the The Pre-conception And Pre-natal Diagnostic Techniques (Prohibition Of Sex Selection) Act, 1994 (PNDT), we propose a Pigovian tax structure that can, perhaps, balance the sex ratio while addressing overpopulation and providing direly needed funding for initiatives. To address overpopulation, the government can introduce an income tax increasing with the number of children -- e.g. 2% for the first child, 4% for the second, etc -- reflecting the increasing marginal costs overpopulation places on public resources. The government can further provide a (e.g. 2%) deduction for girls -- e.g. parents would pay 0% for their first daughter, 2% for the second, etc -- effectively creating a Pigovian tax, transferring the (e.g. 2%) male premium to females. Households with sufficiently low income would receive cash transfers -- e.g. 2% of income for the first (two) daughter(s). We further consider extending the Pigovian tax to a marriage tax on men that will internalize the marginal cost that an excess of males places on the marriage pool. Both the tax deduction and the cash transfer would be conditional on proper annual medical screening, educational participation, etc., effectively making a daughter an annuity incentivizing families to ensure for her safety and well being.