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
> 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 ” 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
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 .
05 July , 2015