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| Tax on black money could improve India's fiscal structure | | |
Once again,on Sunday, Prime Min-
ister Narendra Modi renewed his
commitment on bringing back funds illegally deposited in banks outside the country to avoid tax, widely referred to as "black money".Even before Modi was voted to power he used to say that the money stashed abroad illegally belonged to the poor in India and he considers getting back black money as an article of faith for him. It is so because Prime Minister firmly believes that illegal deposits abroad cost India billions of dollars in lost revenue and Modi had earlier promised his government would change laws or enact new measures to bring back such funds. On taking office, he appointed a panel to investigate the matter.Modi has said he did not know how much black money was deposited in banks overseas, but Washington-based think-tank Global Financial Integrity has estimated that India suffered $344 billion in illicit fund outflows between 2002 and 2011.The government has already submitted a list of people with illegal foreign bank accounts to the Supreme Court of India, which is monitoring the case.One does hope the Supreme Court gives some direction to the Government on ways and means it needs to adopt for bringing back black money which could be utilized on measures that were aimed at bettering the lot of common people.
Black money is income that is not disclosed to the Government and hence is not taxable.Though there is no official word about the exact amount of black money stashed in foreign banks unofficial estimates put the amount at Rs.31 lakh crores which is 30 per cent of India's total GDP.This way the amount stashed in foreign banks illegally is not a small amount but so much huge that if the Government taxed the entire black money at the rate of 30 per cent it could yield about Rs.10 lakhs crores which can help the Government in building 1,80,000 km of national expressways. Bringing entire black money under the umbrella of tax structure is estimated to yield sufficient amount which could help the Government in building 2,000-bed super speciality hospitals in each district of the country.And with this money back in India the Government could declare a tax holiday on all employees,individuals and firms for a period of one year.Once the black money is brought back India can achieve self-sufficiency in power generation and it may be in a position to export electricity to those countries that suffer power shortage.
Over the years a system has been allowed to develop in which individuals and firms and agencies resort to transactions in black money.About half of India's black money transactions are in real estate where the builders ask the buyers to pay over 50 per cent of the cost of the flat,building,apartment in black.This way black money keeps on swelling.Part of the black money is used in manufacturing activity and the remaining in purchase of gold,silver and luxury items,including cars.India's tax base is quite weak because by bringing employees and firms under the tax net the revenue does not show a big leap because major portion of funds are stashed away in foreign banks which is not taxable.Out of the 720 million working population only 34 million pay income tax.Besides this income from agriculture is not taxable which also contributes to weak revenue resources.In fact the black money issue is not a political problem but an economic issue. Hence if the BJP led NDA Government has initiated measures for getting back black money the opposition,especially the Congress,need not rake up the issue of political vendetta.
Let the opposition cooperate with the Government in getting black money back from foreign banks which could change for better economic structure in India. |
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