Dear
Mr Panigariya ,
At
the outset , congratulations on your being appointed as , Vice Chairman of ,
National Institution for Transforming India ( NITI )
I
reproduce below , a couple of emails that I sent to Shri Arun Jaitleyji ( one
was yesterday )
In
- and outside of NITI - you will meet many eminent economists / experts , who
will say ,
"
This idea - Abolition of Personal Income Tax
- is impractical . Just can't be done "
That
is as expected !
History
is full of examples , when seemingly " impossible " thing got DONE ,
simply because , at that point in time , there was ONE person who wanted to get
it done and took it upon himself to DO it !
I
hope , NITI is that living / responding, "
person " , which India has been waiting for !
with
regards ,
hemen
parekh
Mumbai
/ 0 - 98,67,55,08,08
--------------------------------------------------------------------------------------------------------------------
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Dear
Jaitleyji ,
For over two years now , I have
been advocating ,
> " Inverse Taxation Regime " both , for Personal Income Tax as also for Corporate Tax
The more you earn , the less tax ( rate on next higher slab ) you pay
> For Corporate , the more people you employ , the less tax ( rate on next higher slab ) you pay
> Even total abolition of Personal Income Tax
There are over a dozen Countries where there is NIL personal Income Tax
So , there is a precedent that this can work !
If Personal Income Tax was to be totally abolished , what can / may happen ?
* There will be no incentive for tax evasion / avoidance , if I can keep all that I earn without worrying about IT department - or any other Govt Agency finding out about my bank balance ! Let them !
This will be a permanent FULL STOP to future generation of Black Money
* All payments will be received by cheques and deposited in Bank Accounts- digital banking on its way in ? Cash transactions on their way out ?
* All stashed away Black Money will , somehow , on its own , find its way in bank accounts, - including Black Money lying in Foreign Banks , making SIT redundant !
This is the ONLY WAY , NDA government can redeem its promise !
* Savings rate will go up dramatically
* That will lead to greater purchasing power for all people
* Leading to higher domestic consumption of FMCG / Consumer Durables
* This will result in huge collection of GST , offsetting revenue losses
* Demand will go up , boosting manufacturing
* With rise in manufacturing , sub-contracting / outsourcing will increase , giving a big boost to MSME sector
* If manufacturing goes up , employment / self-employment , will go up
* For a change , we as a Nation , will learn to celebrate ,
# Wealth Creation as a means to reduce poverty
# World-size Companies to take on the World
* There will be less pressure on demands for higher salaries / wages
* If salaries / wages do not rise , inflation will ease
* Cost of manufacturing too , will go down
* Era of " Low Cost Economy " will set in ( VIRTUOUS CIRCLE ? )
* Savings will move from gold / land to Financial Assets
* With a low cost structure , our products / services will become , internationally competitive and exports will go up
* That will improve our current negative Trade Balance / CAD
* This ( abolition of Personal Income Tax ) should be coupled with SPVs for
# Infrastructure Projects ( especially Smart Cities / Corridors etc )
# Educational Institutions
# Skill Development Institutions
# Health care Facilities
# Solar Power ( Eqpt Mfr / Generation / Transmission / Distribution )
# Digital India ( Broadband ) Network
No questions must be asked as to the source of money invested in such SPVs
All income ( Corporate Income or Personal Income by way of dividends / interests etc ) arising out of investments made in such SPV , must be tax-exempted
SPVs , themselves , must not need to pay any taxes for 10 years
* What else ?
I hope our newly constituted " Niti Ayoga " will examine my suggestion and guide framing of
> 2015 Central Budget NITI
hemen parekh / Jan 05 ,
2015
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Central
Budget : 2014
Dear Shri Arun Jaitleyji,
Even
as you proceed to present Central Budget to Lok Sabha on 10 July 2014 , please
look out the window of your car and see the " Poor " people on
Delhi's footpath
Then
, like Mahatma Gandhi ask yourself,
"
Whatever budget proposals that I am about to present , will these bring a smile
to the faces of these poor ?
363
million poor Indians , who eke out a survival on expenditure of Rs 32 ( rural )
or Rs 47 ( urban ) per day ? ( $0.5
- 0.8 / day )
For
a family of 4 , that works out to , Rs 3840 - Rs 5640 per month
(
$ 64 - $ 94 per month )
May
be the head of the family manages to earn Rs 2,000 per month , doing odd jobs ,
here and there
The
rest of the income must be coming thru ,
*
Wife scavenging the garbage heaps for
discarded plastic bags / bottles
( when she is not salvaging discarded food ! )
*
Children begging on the streets ( you
will see them as you drive to Lok Sabha )
Now
if,
*
Our population keeps growing at 15 million per year
*
Inflation keeps rising at 10 % per year, necessitating raising " Poverty
Limit " by 10 % per year
Then
,
*
How many more people will get added to "Poor "population, every year ?
May be 5-7 million/year ? 25-35 million by 2019 ? Taking
the total to 400 million ?
Mr
Jaitley ,
Can
you listen to their anguished cries ?
They
are " begging " you to create jobs
for them , so that they can work hard and earn
an honest / decent income , which can lift them above that wretched
" Poverty Line "
They don't want your dole-outs / subsidies for food / LPG / Kerosene
etc !
They
don't want to remain dependent on Sarkaar - Maa Baap , forever !
Sir
,
Can
you ( ie Central Government ) give them jobs ? To even 50 million / year
?
Assuming
that creating ONE job calls for an
investment ( in fixed assets + working capital ) , of Rs 1 million ( Rs 10 lakhs ) , you need,
*
Rs 50 MILLION * MILLION , every year !
And
YOU just don't have that kind of money !
Even
as { Rs 500 MILLION * MILLION } of Black Money is locked up
in un-productive assets , all over the country !
The
only way you can create those 50 million jobs / year , is to enable these Black Monies to turn into WHITE MONEY
and get channeled into Infrastructure / Manufacturing / Services etc
And
the only way you can do is to ,
*
Introduce Amnesty Scheme ( now / immediately )
*
Introduce INVERSE TAX REGIME ( in 2015 Budget )
I
have sent these proposals to Shri Narendra Modi / Shri Murli Manohar Joshi /
Shri Nitin Gadkari etc , during the past 8 months
*
hemen
parekh ( 08 July 2014 / Mumbai )
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