Amnesty scheme on cards for black money

[thakur_ritesh]

The cooliewala is not going to understand why he should part with his hard earned money. Very difficult. When people with way lot money than all of us here put together evade, i dont expect the cooliewala to understand why he should pay about 2000 in tax a year.

mate

if he can understand using a condom can save his life, then if the same people are used to educate him about the tax and the benefits, chances are he will, but for that person the benefits have to accrue there and then. he will be most hungry for the results, and there the local administration to the government, all will have to honest in delivery, and something which happens at a very quick time.

now tax doesnt necessarily need to always go to the state/central governments. have local bodies like panchayats handle a good amount and they along with people from that area decide on what all needs to be done, and with them having the money they can do it immediately. decentralize and strengthen the hands at the most grass root levels. i think then we indeed have a solution at hand.

 

[johnee]

Everyone can easily understand why tax should be paid. But the problem is, there is no trust on the regime. The regimes are distrusted. Partly due to the past british experience, but the independent regimes did not prove much better. When people see the benefits like infrastructure buildup, they would be fine with paying taxes.

Secondly, the taxes are quite high to the extent that the Govt seems to stealing one's hard earned money. So, the taxes need to minimised. I would say that there needs to be a simple and effective taxation instead of slabs and all that. I think a Govt can levy 1/6th of income as income tax for all individuals. There is no need for higher taxes on rich folk. However, a strict implementation is needed.

 

[johnee]

And TR's idea of local body being entrusted with this tax money and local people having a say in its expenditure is very good.

 

[sob]

Ritesh and Yusuf,

You have been discussing about the tax rate of 35%. Please note that this rate has come down gradually to this level from highs of 50%+ which was till 70s and marginally came down in 80s. It was only in late 80s or early 90s that the corporate tax stated to come down.
Also this black money has not been stashed in the last 10 15 years, the origins go back to 1950s or 1960s. Incrementally the amount has grown to such large proportions.
Most of our corporates and big business houses have used a very simple method of stashing money abroad- over invoicing/under invoicing of bills. The scale of this is huge and I can very comfortably say that even the most respected of business houses have indulged in this.

I oppose this amnesty scheme for the simple reason that these people have broken the laws of the country like FERA/FEMA and they are not simple cases of Tax fraud. Also an amnesty scheme is akin to a pat on the back or at most a slap on the wrist and no guarantee of good behavior in the future. This amnesty is only for the rich and the powerful who have the influence and the connection.

 

[pankaj nema]

Such a scheme would be politically SUICIDAL given the current mood in the country

No amnesty for Tax evaders

Secondly Govt of India is so SENSITIVE that when SC asked for an Special Investigation Team for Black money cases
The Government was HURT that its executive authority is being Challenged

Now what if the people say that they are Hurt by this amnesty scheme

 

[Yusuf]

This amnesty is only for the rich and the powerful who have the influence and the connection.

Precisely why is support the amnesty. Give them amnesty and get the money or lose the money. These guys will never be brought to the book.

 

[The Messiah]

Such a scheme would be politically SUICIDAL given the current mood in the country

No amnesty for Tax evaders

Secondly Govt of India is so SENSITIVE that when SC asked for an Special Investigation Team for Black money cases
The Government was HURT that its executive authority is being Challenged

Now what if the people say that they are Hurt by this amnesty scheme

You do know that nearly every person has black money.

When i was in school my tution teacher used to earn around a lakh a month in full cash payments...only he knows how much he showed in the the accounting books.

 

[Yusuf]

Whenever you go out to buy anything, and dont take an invoice, you just made your white money, black for the person selling. He will gladly accept a sale without invoice.

 

[The Messiah]

Or when you buy or sell property that is half in black and half in white.

 

[Yusuf]

Or when you buy or sell property that is half in black and half in white.

It saved India from the housing disaster that kick started the recession.

 

[Dovah]

Precisely why is support the amnesty. Give them amnesty and get the money or lose the money. These guys will never be brought to the book.

Can't we just lure them in with this Amnesty thing and then lock them up? These guys deserve it.

 

[Yusuf]

Can't we just lure them in with this Amnesty thing and then lock them up? These guys deserve it.

Cannot happen. Legal clause will be there that it cannot happen. That's why the term amnesty.

 

[sandeepdg]

If you guys read TOI regularly, then you would have noticed articles on finance and economy by Swaminathan Aiyar. He is the consulting editor of "The Economist" and a research scholar of The Cato Institute, Washington D.C. His column is termed "Swaminomics".

He wrote an interesting article during this whole bring-black money-home saga started flaring in the national media. He said its ignorant for people to think that some trillions of dollars has been stashed by Indians abroad. All first world economies have very low interest rates in their banks and even investing them will never give as much return as a booming economy like India, with a year-on-year GDP growth of 6-8 % over the past decade or so. He said though there is a substantial amount of money indeed in foreign tax haven stashed by Indians, but its nowhere close to the trillions quoted by many people here. He said most of the money has already made it back to India since the economy started growing and keeps on circulating under the table as black money here in India itself and hence remains invisible.

Anyway, even if the government is offering these tax offenders amnesty, I think they should make an effort to extract as much as possible from the illegal wealth of these people by taxing them heavily.

More importantly, they should enter into double taxation treaty will all the tax heavens and enter into agreements for disclosure of financial info with all these countries just like the US got with the Swiss.

 

[Yusuf]

Sandeep, that's what I have said earlier. Money in the bank is no good. It has to be invested in more profitable ventures. Yes a lot of this money does cone back.

Take IPL for example. Quite a bit has come in. Notice how most holding companies are in Mauritius, a tax haven. All these companies have suspect ownership.

 

[sob]

All these arguments about return on the bank deposits is all hogwash. Money is never deposited in the Swiss banks for getting returns. These banks are used because they will keep your dirty money a secret. Period nothing more than that. Swiss banks are not used for their portfolio management skills, it is their conservatism and secrecy that is desired. A return of 5% tax free is the tops that is expected and desired.

Indians with money stashed away in such tax heavens are not ordinary tax evaders. They have broken multiple laws relating to tax and foreign exchange regulations. These people collectively have been responsible for the current state of economy.
Giving them amnesty is no guarantee that they will not open more accounts in the future. We have had many such amnesty laws in the past and only a fraction of the money is collected. According to many economists these amnesty schemes have never achieved desired results. It is only when the Taxman approaches people with these tax accounts and threatens them with prosecution that they will disclose the full extent of their I'll gotten wealth. Till that time we will continue to be the laughing stock of the global community.

 

[Yusuf]

Obama to propose 'Buffett Tax'

US President Barack Obama, in a populist step designed to appeal to voters, will propose a "Buffett Tax" on people making more than $1 million a year as part of his deficit recommendations to Congress.

http://toi.in/Vhr0OY


Posting this report as it's relevant to this thread in Indian scenario. Tax law loopholes is something that we talked about here. Beat part of this is, you can't be taken to task for having any black money as you have used the loopholes in the law to evade tax but still not have black money, by the book that is.