A Gordian Knot ?
Dear Policy Maker :
Is black
money issue a Gordian Knot that cannot be unraveled ?
One gets that
feeling while observing the NDA governments attempts, viz:
>
Setting up of SIT
>
Signing bi-lateral treaties with foreign countries for exchange of info on bank
accounts held by Indian citizens in these countries
>
90 day window for declaring assets held illegally in foreign banks
>
Proposal to grant minor tax-concessions if payments for petrol / diesel etc is
made using credit cards
>
Legislating that sundry kinds of payments are to be made thru banking system
>
Introduction of Gold Bonds
>
Introduction of stringent laws for punishing tax-evaders with jail terms, etc
Could not
UPA government have done all of these in the past 15 years ?
And , if
they could , why did they not ?
I could
think of only 2 reasons , viz :
>
Either UPA government did not think that any of such measures could solve the
black money problem , which is in the nature of a Gordian Knot
OR ,
>
UPA did not want to solve this problem !
After one year
of NDA rule , people are asking :
"
Why is this government , which has within one year , launched some epoch-making
economic and governance reforms , continuing to tinker with the black money
issue ?
Why is it
focusing on unearthing black money stashed away in foreign banks, which
constitute no more than 5 % of the black money hiding within the country ?
Why is all
the emphasis on " past " black money declaration rather than on
prevention of " future " black money generation - which goes on unabated
? "
I sincerely
believe that NDA wants to put a permanent stop to black money generation
But , it
just cannot think " out-of-the-box " as Alexander the Great did when
he simply cut the Gordian Knot with his sword rather than try to untie it
!
It is still
not late for NDA to do the following :
>
In the first instance , instead of increasing the personal Income Tax rates
with
each higher slab , reduce these ( eg : 10 % > 9% > 8% > 7% ..... )
>
If this " Inverse Taxation Regime " makes people want to declare more
and
more income , in order to get into higher tax slab , then next consider total
abolition of Personal Income Tax !
In a
nutshell :
>
Take away incentive to hide income
>
Motivate people to declare ALL income
>
Celebrate Wealth Creation
>
With no Personal Income Tax to be paid , everyone will insist on making /
receiving all payments officially thru banking channels
>
Do not tax people at the point of income
generation ( Source )
>
Tax them at the point of income expenditure
( Destination ) eg: GST
>
Boost national " Domestic Savings Rate
" to 40 % ( never a Greek Tragedy ? )
>
Enable savings to flow into Infrastructure Bonds ( Railway / Ports / Airports /
Smart Cities / Highways / River Linking / Solar Power etc ) , rather than into
non-productive assets
This is
NDA's " Moment of Opportunity
" - an opportunity to re-write history !
There is no
surer / simpler / faster way to bring India's 400 million poor people
out of
abysmal poverty .
And imagine , no politician being sued
for amassing assets disproportionate to known sources of income !
-------------------------------------------------------------------------------------------------------------------------------------
hemen
parekh
07
July , 2015
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