__________________Black Money in India________________________
Is India poor, who says? Ask Swiss banks
With personal account deposit bank of $1500 billion in foreign reserve which have been misappropriated, an amount 13 times larger than the country's foreign debt, one needs to rethink if India is a poor country?.
DISHONEST INDUSTRIALISTS, scandalous politicians and corrupt IAS, IRS, IPS officers have deposited in foreign banks in their illegal personal accounts a sum of about $ 1500 billion, which have been misappropriated by them. This amount is about 13 times larger than the country's foreign debt. With this amount 45 crore poor people can get Rs 1,00,000 each. This huge amount has been appropriated from the people of India by exploiting and betraying them.
Once this huge amount of black money and property comes back to India, the entire foreign debt can be repaid in 24 hours. After paying the entire foreign debt, we will have surplus amount, almost 12 times larger than the foreign debt. If this surplus amount is invested in earning interest, the amount of interest will be more than the annual budget of the Central government. So even if all the taxes are abolished, then also the Central government will be able to maintain the country very comfortably.
Some 80,000 people travel to Switzerland every year, of whom 25,000 travel very frequently. "Obviously, these people won't be tourists. They must be travelling there for some other reason," believes an official involved in tracking illegal money. And, clearly, he isn't referring to the commerce ministry bureaucrats who've been flitting in and out of Geneva ever since the World Trade Organisation (WTO) negotiations went into a tailspin!
Just read the following details and note how these dishonest industrialists, scandalous politicians, corrupt officers, cricketers, film actors, illegal sex trade and protected wildlife operators, to name just a few, sucked this country's wealth and prosperity. This may be the picture of deposits in Swiss banks only. What about other international banks?
Black money in Swiss banks -- Swiss Banking Association report, 2006 details bank deposits in the territory of Switzerland by nationals of following countries:
Top five
India---- $1456 billion
Russia---$ 470 billion
UK-------$390 billion
Ukraine- $100 billion
China-----$ 96 billion
Now do the maths - India with $1456 billion or $1.4 trillion has more money in Swiss banks than rest of the world combined. Public loot since 1947: Can we bring back our money? It is one of the biggest loots witnessed by mankind -- the loot of the Aam Aadmi (common man) since 1947, by his brethren occupying public office. It has been orchestrated by politicians, bureaucrats and some businessmen. The list is almost all-encompassing. No wonder, everyone in India loots with impunity and without any fear.
What is even more depressing in that this ill-gotten wealth of ours has been stashed away abroad into secret bank accounts located in some of the world's best known tax havens. And to that extent the Indian economy has been stripped of its wealth. Ordinary Indians may not be exactly aware of how such secret accounts operate and what are the rules and regulations that go on to govern such tax havens. However, one may well be aware of 'Swiss bank accounts,' the shorthand for murky dealings, secrecy and of course pilferage from developing countries into rich developed ones.
In fact, some finance experts and economists believe tax havens to be a conspiracy of the western world against the poor countries. By allowing the proliferation of tax havens in the twentieth century, the western world explicitly encourages the movement of scarce capital from the developing countries to the rich.
In March 2005, the Tax Justice Network (TJN) published a research finding demonstrating that $11.5 trillion of personal wealth was held offshore by rich individuals across the globe. The findings estimated that a large proportion of this wealth was managed from some 70 tax havens.
Every citizen and even Media Should help to get all that money back and pull out our nation from crisis
Now if the Black Money ($1500 billion from Swiss Bank) returns to India then? Check the following figures and think.
GDP (purchasing power parity): $2.966 trillion (2007 est.)
GDP (official exchange rate): $1.099 trillion (2007 est.)
GDP - real growth rate: 9% (2007 est.)
GDP - per capita (PPP): $2,600 (2007 est.)
GDP - composition by sector: agriculture: 17.8%
industry: 29.4%
services: 52.8% (2007 est.)
Labor force: 516.4 million (2007 est.)
Labor force - by occupation: agriculture: 60%
industry: 12%
services: 28% (2003)
Unemployment rate: 7.2% (2007 est.)
Population below poverty line: 25% (2007 est.)
Household income or consumption by percentage share: lowest 10%: 3.6%
highest 10%: 31.1% (2004)
Distribution of family income - Gini index: 36.8 (2004)
Inflation rate (consumer prices): 6.4% (2007 est.)
Investment (gross fixed): 33.9% of GDP (2007 est.)
Budget: revenues: $141.2 billion
expenditures: $172.6 billion (2007 est.)
Public debt: 58.2% of GDP (federal and state debt combined) (2007 est.)
Agriculture - products: rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes; cattle, water buffalo, sheep, goats, poultry; fish
Industries: textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software
Industrial production growth rate: 8.5% (2007 est.)
Electricity - production: 665.3 billion kWh (2007 est.)
Electricity - consumption: 517.2 billion kWh (2006 est.)
Electricity - exports: 378 million kWh (2006 est.)
Electricity - imports: 3.189 billion kWh (2006 est.)
Oil - production: 880,500 bbl/day (2007 est.)
Oil - consumption: 2.722 million bbl/day (2007 est.)
Oil - exports: 450,700 bbl/day (2005 est.)
Oil - imports: 2.159 million bbl/day (2005 est.)
Oil - proved reserves: 5.625 billion bbl (1 January 2008 est.)
Natural gas - production: 31.7 billion cu m (2007 est.)
Natural gas - consumption: 41.7 billion cu m (2007 est.)
Natural gas - exports: 0 cu m (2007 est.)
Natural gas - imports: 10 billion cu m (2007 est.)
Natural gas - proved reserves: 1.075 trillion cu m (1 January 2008 est.)
Current account balance: -$12.11 billion (2007 est.)
Exports: $151.3 billion f.o.b. (2007 est.)
Exports - commodities: petroleum products, textile goods, gems and jewelry, engineering goods, chemicals, leather manufactures
Exports - partners: US 15%, China 8.7%, UAE 8.7%, UK 4.4% (2007)
Imports: $230.5 billion f.o.b. (2007 est.)
Imports - commodities: crude oil, machinery, gems, fertilizer, chemicals
Imports - partners: China 10.6%, US 7.8%, Germany 4.4%, Singapore 4.4% (2007)
Reserves of foreign exchange and gold: $275 billion (31 December 2007 est.)
Debt - external: $149.2 billion (31 December 2007)
Stock of direct foreign investment - at home: $95.96 billion (2007 est.)
Stock of direct foreign investment - abroad: $37.5 billion (2007 est.)
Market value of publicly traded shares: $818.9 billion (2006)
Currency (code): Indian rupee (INR)
Exchange rates: Indian rupees (INR) per US dollar - 41.487 (2007), 45.3 (2006), 44.101 (2005), 45.317 (2004), 46.583 (2003)
Fiscal year: 1 April - 31 March
Please forward to Everyone.
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BLACK MARKET AND THE INDIAN ECONOMY
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Statistics:
It is said that black money in India accounts for 20 % of GDP. If this
is true, then black money generated every year must be around Rs
400,000 crore or $ 80 billion. This is a huge amount, more than the
entire budget of the government at the Centre. We have a government
that spends about Rs 350,000 crore a year, most of it on itself, and
asks for accounts of every paisa. On the other side, we have black
money worth Rs 400,000 crore every year, which is just guesswork, and
there are no accounts. This money goes into property, which is why
real estate prices are so high, and of course five-star hotels. If the
government could have all this money, or even a small fraction, there
would be no need for revenue or fiscal deficits, and no need for huge
borrowings to make two ends meet.
How big is $ 100 billion? It is bigger than you think. It is worth Rs
500,000 crore, which makes it bigger than the central budget. It is
more than twice our annual exports. It is equivalent to 30 times what
Enron is supposed to have invested on its Dabhol project. It is more
than what the US government is expected to pay those who have suffered
from the September 11th smash. And, if you must know, it is a fifth of
our annual GDP, which is itself a big figure.
Introduction:
The CBDT is hopeful of collecting more than Rs 7,000 crore (Rs 70
billion) as income tax area, the target indicated by Finance Minister
P Chidambaram for the current financial year. The board has already
collected Rs 3,400 crore (Rs 34 billion) during the first six months
of the current fiscal year, compared to Rs 2,700 crore (Rs 27 billion)
in the same period a year earlier.
Finance Minister P Chidambaram\\\'s Budget speech for 2004-05 shows
there were only 27 million taxpayers in the country on the date of the
presentation of the Budget. This indicates the tax evasion rampant in
the country.
The economy keeps growing and so does the deficit, while the revenues
do not increase in the same proportion as the economy grows. There
could be a number of reasons for the shortfall, which may vary from
year to year like recession in the industrial sector or shortfall in
agricultural production. But one factor that has been constant for the
last five decades is the tax evasion. There are so many loopholes in
the tax system that allows people and organizations to evade taxes
with impunity. There are no reliable estimates of the extent of the
tax evasion in this country. But some studies show that the size of
black money has grown significantly over the past many years If this
tax evasion were checked, the Finance Minister would never be faced
with shortfall in tax collection and would have a very low fiscal
deficit. Therefore, the Finance Minister instead of resorting to
increase in tax rates or coming out with amnesty schemes should find
other means to increase the revenue collection. One such way is to
plug the loopholes, which encourages tax evasion. Most of the tax
evasion occurs when transactions are done in cash and never recorded.
This has been the experience of many countries and they have come out
with measures that discourage cash transactions and encourage recorded
transactions. One such mechanism has been the use of debit and credit
cards combined with payment through banking mechanism. The Finance
Minister should come out with such a provision, which encourages
cashless transaction.
As a first measure it may be made mandatory that all salaries above Rs
10,000 per month, both in public and in private sectors, be directly
credited to individuals\\\' accounts in their respective banks.
Secondly, payments above a certain amount may also be made mandatory
through debit / credit cards and through cheque or bank drafts. With
electronic banking gaining importance, transfers through banking
mechanism will become as easy as receiving or making payments by cash.
In most of the countries the use of debit and credit cards for making
and receiving payments has reached a point that for buying even one
small ball pen payment is made through credit / debit card.
Similarly, payments for the sale and purchase of immovable property,
various kinds of consumer goods and services beyond a certain
stipulated amount should also be made mandatory through banking
channels. While doing so, the Finance Minister will not only be
plugging one of the biggest loopholes leading to tax evasion but would
also reduce the need for ready cash and hence the printing of currency
notes on a large scale.
The biggest chunk of black money is invested in real estate and gold.
The circulation of black money in the housing sector is beyond
imagination. Since the house tax is based on the current purchase
price only one fourth of the money is paid by cheque and the rest in
unaccounted cash. Even an honest buyer of flats / houses is forced to
pay in black money if he wants to acquire one.
History:
The period 1946-61 was one of the intense creativity. A black or
parallel economy emerged both in the wake of the Second World War and
the expansion of the economic activity in the post-independence
period. Incentives were provided through the taxation laws to promote
savings and investment; this made the tax laws more complex. Then,
there was the need for larger revenues to finance the plans of
economic development. Thorough investigations were, therefore,
conducted into the structure of taxation not only with a view to widen
the base of income tax but also to look for new taxes and to prevent
tax evasion and avoidance. The Income-tax administration came under
heavy strain due to the increase in the volume and complexity of its
work.
Nature:
There are two powerful ethical props for a different view than the one
the court has taken.
1. It is a plain fact that many high-earning persons evade income tax
by ruthlessly exploiting the loopholes in the laws. Black money is the
outcome of this practice. And neither the income tax department has
mounted an effective campaign to hunt out these tax cheats, nor has
the court, any court, felt provoked to order a comprehensive
crackdown.
2. The widespread ruse of doling out big money to top executives and
others by describing it as reimbursement.
Constituent activities of Black Economy:
1. Legal activities that are not reported to the tax authorities and
the income which goes untaxed and unreported. For instance: it is not
illegal to clean someone\\\'s house, to feed people or to drive them.
It is, however, illegal to hide the income generated by these
activities and not to pay tax on it. In most countries of the world,
this is a criminal offence, punishable by years in prison.
2. Illegal activities, which needless to say, are also not reported to
the state (and, therefore, not taxed).
The money generated by these activities is largely held in foreign
exchange outside the banking system or smuggled abroad (even through
the local banking system).
How is it formed?
A parallel or a black market is an illegal structure that is created
in response to government intervention, which produces excess supply
or demand for a product. When the price of foreign currency is set
below the market-clearing rate, an excess demand is usually generated
for acquiring foreign currency. The government has the choice of
either devaluating the currency, or maintaining strict controls over
exchange, such as setting quotas on the purchase of foreign exchange.
Such currency controls are designed by governments in order to limit
the use of foreign exchange in transactions. This parallel economy, or
black market, emerges through the manipulation of the economic forces
of supply and demand for both currency and commodities. A black market
also emerges when trade and industry create an artificial situation of
scarcity or glut, and in the process amass high returns on their
investments by profiteering. As a result of profiteering activity, the
black market generates unreported income and wealth, which escape
detection by official statistics. Much of the strength of the black
market can be attributed to the resale of officially allocated foreign
exchange holdings and to the incentive to under invoice and smuggle
exports. He argues that an increase in the black market rate, given
the official exchange rate, creates an incentive for residents abroad
to channel their remittances through the black market. This raises
their private receipts in terms of home currency and deprives the
central bank of this foreign exchange. Economists studying black
market activity in developing countries advocate that it is best to
keep the black market premium rate as low as possible. By influencing
the determinants of the black market exchange rate, developing
counties can keep the black market premium rate low and increase their
official foreign exchange currency holdings.
Effects of black money on Indian Economy:
§ Affects public revenues,
§ Degenerates the investable surplus,
§ Delimits the national productivity,
§ Drains the balance of payments,
§ Distorts equity and equality concepts of economic distribution.
HAWALA SCAM --- Financing Illegal Trade:
What makes the illegal market prosper is the large amount of black
money that is easily accessible to traders. Thus money can be
transferred to any country of the world through the illegal money
market. The existence of a massive black economy consisting of both
domestic and foreign currency makes such trade possible. Illegal trade
is financed either by high value precious metals like gold and silver
or by liquid money through a network of unauthorised moneylenders. In
the former case gold is smuggled physically and then converted into
the desired currency. However gold smuggling is risky and a preferred
mode is through the illegal money market. The uniqueness of this
system is that there is no physical transfer of currency. This
mechanism referred to as the hawala in India, the hundi in
Bangladesh and the chit fund in Sri Lanka operates on the same
principles.
Advantages:
The black economy has many more important functions:
§ The black economy is a cash economy.
§ It is liquid and fast.
§ It increases the velocity of money.
§ It injects much needed foreign exchange into the economy and
inadvertently increases the effective money supply and the resulting
money aggregates. In this sense, it defies the dictates of \\\"we know
better\\\" institutions such as the IMF.
§ It fosters economic activity and employs people.
§ It encourages labour mobility and international trade. Black
economy, in short, is very positive. With the exception of illegal
activities, it does everything that the official economy does and,
usually, more efficiently.
§ The black economy is especially important in times of economic
hardships. Countries in transition are a private case of emerging
economies, which are a private case of developing countries that are
called (in less politically correct times) \\\"Third World
Countries\\\". They suffer from all manner of acute economic
illnesses. They lose their export markets, they are technologically
backward, their unemployment skyrockets, their plant and machinery are
dilapidated, their infrastructure decrepit and dysfunctional, they are
lethally illiquid, they become immoral societies (obligations not
honoured, crime flourishes), their trade deficits and budget deficits
balloon and they are conditioned to be dependent on handouts and
dictates from various international financial institutions and donor
countries.
§ It enhances exports (and competitiveness through imports), it
encourages technology transfers, it employs people, it invests in
legitimate businesses (or is practiced by them), it adds to the wealth
of the nation (black marketers are big spenders, good consumers and
build real estate), it injects liquidity to an otherwise dehydrated
market.
Disadvantages:
So, what is morally wrong with the black economy? The answer, in brief:
§ It is exploitative. Other parts of the economy, which are not hidden
(though would have liked to be), are penalized for their visibility.
They pay taxes. Workers in a factory owned by the state or in the
government service cannot avoid paying taxes.
§ The money that the state collects from them is invested, for
instance, in infrastructure (roads, phones, electricity) or used to
pay for public services (education, defense, policing). The operators
of the black economy enjoy these services without paying for them,
without bearing the costs and worse: while others bear the costs. This
encourages them, in theory to use these resources less efficiently.
§ And all this might be true in a highly efficient, almost ideal
market economy. The emphasis is on the word \\\"market\\\".
Unfortunately, we all live in societies, which are regulated by
bureaucracies that are controlled (in theory, rarely in practice) by
politicians. These elites have a tendency to misuse and to abuse
resources and to allocate them in an inefficient manner.
Measures taken by the Government:
In a unique drive launched a few days before the presentation of the
Union Budget, the CBI has registered 36 cases against 112 government
officials and others after search operations across the country in a
bid to unearth black money amassed by them. The drive conducted under
a team of joint directors of the agency, has reportedly been able to
unearth black money amounting to lakhs of rupees, CBI sources said
here today. He said simultaneous searches were carried out on 109
official and residential premises of accused or suspected persons. In
these cases 21 accused / suspected persons belonged to the Union Bank
of India, the Reserve Bank of India, Sikkim Bank, the United Bank of
India and private firms located at Mumbai. These cases pertained to
cheating, export fraud, abuse of powers and falsification of records
resulting in wrongful loss to the banks and public institutions. Cases
taken up for investigation were of the Anti-corruption division, the
economic offences Wing and the special crimes division.
Although the stamp duty department maintains a list of rateable value
properties in Mumbai, the main concern is that in most of the cases
the rates are much higher than the actual transacted rates for the
actual property. However, instead of addressing these irregularities,
authorities have increased the stamp duty rates!
It is a well known fact that because of high stamp duty, buyers have
been quoting their property much below the actual transacted value.
This is mainly because it enables the buyers to save substantial
amount on the stamp duty outgo, since stamp duty is charged on the
value of the property. This practice of undervaluing property is not
ethical and moreover it leads to accumulation of black money in the
economy, which is not good. For instance, there are cases where
builders / sellers ask up to 40 % of the transacted value of the
property as black money. This gives a distorted picture of the real
estate price, as there is a huge difference in the transacted price
and the rate list maintained by the stamp duty authorities.
Why the Policies implemented so far are Ineffective?
Now the Supreme Court has ordered that dearness, house rent and city
compensatory allowances are income and attract tax. Theoretically, the
ruling covers only the employees of the government and those of public
sector undertakings and the two nationalised insurance companies since
the original dispute arose from their petition. But the judgement is
so general in nature that every salaried individual receiving any
allowance of this nature has to pay tax on it if he or she is not
already doing so. It is an old demand of those with a regular income
that those payments which are compensatory in nature should be
tax-free if the underlying idea is not to be perverted.
Government intends to undertake:
The government is likely to announce a scheme to channel black money
into a dedicated fund, which could be used for funding the
government\\\'s social sector programme. The fund, which may be
announced in the Budget for 2005-06, could be modeled on the lines of
the Prime Minister\\\'s Relief Fund. Government sources said the
revenue department was contemplating various other strategies. One
option would be to issue bonds to raise funds for infrastructure and
social sectors, which would not yield any returns in the initial few
years. An official said a scheme on the lines of the Voluntary
Disclosure of Income Scheme 1997, launched during P Chidambaram s
previous stint as finance minister, was ruled out.
Suggestions:
All citizens should be obliged to file annual, personal tax returns
(universal tax returns, like in the USA). This way, discrepancies
between personal tax returns and other information can lead to
investigations and discoveries of tax evasion and criminal activities.
All citizens should be obliged to file bi-annual declarations of
personal wealth and assets (including real estate, vehicles, movables,
inventory of business owned or controlled by the individual, financial
assets, income from all sources, shares in companies, etc.).
All retail outlets and places of business should be required to
install over a period of 3 years cash registers with \\\"fiscal
brains\\\". These are cash registers with an embedded chip. The chips
are built to save a trail (detailed list) of all the transactions in
the place of business. Tax inspectors can pick the chip at random,
download its contents to the tax computers and use it to issue tax
assessments. The information thus gathered can also be crossed with
and compared to information from other sources. This can be done only
after the full implementation of the recommendations in the section
titled \\\"Databases and Information Gathering\\\". (While it
increases business costs it is not likely to prevent cash or
otherwise unreported transactions).
All registrars should be computerized: land, real estate, motor
vehicles, share ownership, companies registration, tax filings, import
and export related documentation (customs), VAT, permits and licenses,
records of flights abroad, ownership of mobile phones and so on. The
tax authorities and the Public Revenue Office (PRO) should have
unrestricted access to ALL the registers of all the registrars. Thus,
they should be able to find tax evasion easily (ask for sources of
wealth- how did you build this house and buy a new car if you are
earning 500 DM monthly according to your tax return?) The computer
system should constantly compare VAT records and records & statements
related to other taxes in order to find discrepancies between them.
Gradually, submissions of financial statements, tax returns and wealth
declarations should be computerized and done even on a monthly basis
(for instance, VAT statements).
Tax inspectors and customs officials should receive police powers and
much higher salaries (including a percentage of tax revenues). The
salaries of all tax inspectors regardless of their original place of
employment should be equalized (of course, taking into consideration
tenure, education, rank, etc.) Judges should be trained and educated
in matters pertaining to the informal economy. Special courts for
taxes, for instance, are a good idea. Judges have to be trained in tax
laws and the state tax authorities should provide BINDING opinions to
entrepreneurs, businessmen and investors regarding the tax
implications of their decisions and actions
All contracts between firms should be registered in the courts and
stamped to become valid. Contracts thus evidenced should be
accompanied by the registration documents (registrar extract) of the
contracting parties. Many \\\"firms\\\" doing business in Macedonia
are not even legally registered.
A special inter-ministerial committee with MINISTER-MEMBERS and headed
by the PM should be established. Its roles: to reduce bureaucracy, to
suggest appropriate new legislation and to investigate corruption.
Bureaucracy should be pared down drastically. The more permits,
licenses, tolls, fees and documents needed the more corruption. Less
power to state officials means less corruption. The One Stop Shop
concept should be implemented everywhere.
To impose a VAT system. VAT is one the best instruments against the
informal economy because it tracks the production process throughout a
chain of value added suppliers and manufacturers. The Tax code needs
to be simplified. Emphasis should be placed on VAT, consumption taxes,
customs and excise taxes, fees and duties. To ensure progress, the
government should directly compensate the poor for the excess relative
burden.
Special tax courts should be established within the existing courts.
They should be staffed by specifically trained judges. Their decisions
should be appealed to the Supreme Court. They should render their
decisions within 180 days. All other juridical and appeal instances
should be cancelled except for an appeal instance within the PRO.
Thus, the process of tax collection should be greatly simplified. A
tax assessment should be issued by the tax authorities, appealed
internally (within the PRO), taken to a tax court session (by a
plaintiff) and, finally, appealed to the Supreme Court (in very rare
cases).
White Sugar is often imported as brown sugar. One way to prevent this
is to place sugar on the list of LB (import license required) list, to
limit the effective period of each license issued, to connect each
transaction of imported brown sugar to a transaction of export, to
apply the world price of sugar to customs duties, to demand payment of
customs duties in the first customs terminal, to demand a
forwarder\\\'s as well as an importer\\\'s guarantee and to require a
certificate of origin. The same goes for Cooking Oil (which when it
is imported in a package is often declared as some other good).
Simplicity in tax laws is certainly a desirable objective. US tax laws
are 5 times the size of Indian tax laws, in terms of the number of
clauses! Yet, the US tax laws are considered simpler than Indian tax
laws. There is only one reason - constant change, and lack of
continuity, in Indian tax laws, creating uncertainty on the
applicability of different tax provisions. Add to that, the
multiplicity of inspectors, the voluminous records to be maintained,
the limited role of computerisation, the vagueness in wordings of
rules and regulations, leading to subjective interpretation, and,
thereby, the uncertainties with respect to compliance - and you have a
level of complexity beyond what rocket scientists ever encounter!
§ Simplicity
§ Stability and Continuity
§ Certainty
§ Reasonable tax rates
§ Ease of Compliance
Unfortunately, in the past, for checking evasion, stress had mostly
been on legislative measures, forgetting that equal importance is to
be given to administrative aspects. In the discussion to follow, some
suggestions for checking evasion, through legislation, and for
improving compliance to tax laws are being mentioned. As indicated
earlier, the problems need to be tackled in two ways -- by legislation
and taking effective administrative measures. Other measures for
checking tax evasion through legislation could be:
§ Taxing big and prosperous agriculturists\\\' incomes and wealth.
§ Introducing donee-based gift tax.
§ Permitting tax officials to have power of door-to-door survey.
§ Claims for losses / expenses relating to undisclosed or illegal
incomes should not be recognised for tax assessments while taxing
incomes from such sources.
In countries like Belgium, Greece and France, there is provision for
confiscation of personal rights like arms or driving license of
persons found guilty of dealing with black money or resorting to tax
evasion. Similar law should be made in India too. Such persons should
also be debarred from holding any elective offices, including
directorships in companies.
More emphasis must be laid on these aspects instead of floating
amnesty schemes and issuing bearer bonds. It needs to be borne in mind
that such schemes merely tackle that too to a very limited extent, the
problem relating to \\\'stock\\\' concept in black money and do not
provide solutions for checking the onslaught of black money generation
-- the flop concept.
Among administrative aspects, strict measures can only create impact.
Some suggestions in this context are:
§ Tax laws should permit wide publicity through media regarding
persons found guilty of tax evasion.
§ Social conscience needs to be aroused amongst people against tax
evasion, for attaching social stigma for tax evaders and to work as
sentinels for identifying black marketers and tax dodgers.
§ The most important measure for checking evasion is to establish
credibility of the government regarding its own integrity before
exhorting persons to pay their taxes correctly.
Some other measures, of an administrative nature, could be:
§ Disentitling tax evaders / defaulters to avail of the facility of
payment of taxes in the installments and getting credit facilities
from banks.
§ Streamlining procedure for speedy determination of tax disputes.
Special courts for this need to be set up.
§ Paying special attention towards training for detection of tax
frauds, evasion and black money generation, including deputation of IT
officers to other countries for training to tackle cross border tax
evasion.
§ Providing adequate security to tax officials, conducting search and surveys.
§ Improving morale of the tax department officials by providing them
adequate infrastructure and other facilities, by recognition of their
merit and giving them the place that they deserve in the overall
government set up.
Conclusion:
There had been umpteen talks and voluntary disclosure schemes in the
past for checking evasion and black money, but no perceivable results
have come. Rather, the quantum of black money in circulation has
increased substantially in volume. There is one sure medicine:
eliminate the population and both unemployment and inflation will be
eliminated. So long as cash transactions continue to be made, tax
evasion will be there and black money will continue to be generated.
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