Millennium Post

The scourage of black money

The scourage of black money
Diving into the fathomless depth of an ocean in search of a black box is important to ascertain the truth behind an air crash and is perfectly justified, but advancing the same logic to go round the world and dig into an uncertain depth of hostile legal marsh to unearth black money hordes by individuals and corporates would appear to be rather impractical.

The latter proved to be a totally futile exercise in the case of the government’s bid to recover Bofors kickback to the tune of rupees 64 crore, allegedly received by Indian politicians and army generals in 1987 against a purchase of field guns from the Swedish manufacturer, after a 25-year chase by the CBI, ED, ACB and other enforcement agencies and spending about Rs 250 crore of tax-payers money in the process. For all practical purposes, the case is closed. The alleged kingpin, Ottavio Quattrocchi, an Italian businessman, reportedly close to the family of the then prime minister, Rajiv Gandhi, died in Milan, last year. The case allowed Indian official investigators and legal personnel travel through a good part of Europe, South East Asia and South America at the government expense to return empty handed or, maybe, with some small gifts for friends and family members at home.

 Contrast this with the latest effort by our taxmen, who detected undisclosed income worth Rs 1 lakh crore in the financial year 2013-2014 alone without much fuss and noticeable cost to the exchequer. The tax sleuths found the huge hordes of black money in the backyards of their owners based in the country. The black money unearthed by the income-tax department last year was reportedly more than double the figure seized by the income-tax department in the course of its raids conducted a year ago. The illegal hoarders of the unaccounted cash and movable assets included individuals, business firms, corporates and other financial institutions.

This suggests that while the government, by all means, must chase all leads pertaining to tax evasions, havala transactions, illegal bank accounts of Indians held abroad, not only in tax havens but also in countries known to follow rigorous tax laws, but it must make a stronger effort to unearth tonnes of black money which is lying in the open back home, everywhere, all over the country, in real estates, in business outlets, in cars, in gold, diamonds and jewellery, in conspicuous consumption such as lavish weddings, reception and parties, etc.

Most Indian politicians, senior bureaucrats, including taxmen, businessman, etc. have their children and properties abroad. The latter are potential sources of bankrolling portions of Indian black money. There is little black about the colour of unaccounted or tax-avoided or tax-evaded Indian money.

The government need not go too far in search of unaccounted treasures. Indians love to flaunt their ill-gotten wealth. The National Capital Region (NCR) has probably the largest number of such Indians. All that the government has to do is to conduct a property census in a city like Delhi on the lines the Swiss authorities did in the early 1950s. That would reveal how much of well-to-do Delhiites’ wealth commensurate with their tax-paid or declared income. Among the worst tax offenders are affluent private physicians and surgeons in cities, who earn between rupees one lakh to five lakhs per day, private clinics, nursing homes and educational institution owners, shopkeepers who rarely give genuine cash receipts for sale of such high-value household items as refrigerators,
air-conditioners, kitchenwares, furniture and fittings.

 Teachers making tonnes of cash out of private tuitions, lawyers, real estate agents, contractors, architects and transport operators are part of the long list of habitual tax offenders, running India’s parallel economy. Flush with unaccounted money, they are primarily responsible for fuelling the inflation. They are the people responsible for fat income of retailers of food articles in the market as they never question the retail price, leave alone bargaining. They are not interested to know why prices of fruits and vegetables at Okhla are 50 to 60 per cent cheaper than those at retail markets at CR Park, Greater Kailash I and II, Panchsheel, etc, which are just four to five kms kilometres away from the Okhla market. Or, why the same stuff is 150 to 200 per cent costlier in the Khan Market, a shopping complex in the midst of the residential quarters of senior bureaucrats of the government of India, judges from superior courts, ministers and politicians and a handful of business tycoons.

Residents of Central Delhi and other posh colonies of the city are the least bothered about the prices of potatoes, onions, garlic, tomatoes, green chilli, bananas, papayas and cucumbers.
 As long as those massive tribes of large unaccounted cash hoarders control the country’s market scene, the RBI’s monetary policy will stay blunted and have no impact on the high inflation rate. The inflation is the direct result of the huge unaccounted money supply with a large section of the public in both the urban and semi-urban areas. The tax department has to be more pro-active and vigilant to suck up the money generated from unpaid taxes, direct and indirect, to the government. No government can exercise a proper currency control regime without a perfect system to ensure tax compliance by individuals and business entities.

The current direct tax rates in India are very favourable to its citizens compared to those in other advanced countries. If a section of citizens still want to hide income and evade tax payments, the government must take appropriate action to book the tax offenders, cease their properties and jail them.

International German tennis icon Steffi Graf’s father, who handled her prize money and endorsement income running into millions of dollars per year, was sent to jail for tax evasion that threatened to affect her career and the German supremacy in the global world women’s tennis. Another ace German tennis star, Boris Becker, chose to move to Monti Monte Carlo instead of paying high income tax to the government of the Federal Republic of Germany. Formula One racing legends Michael Schumacher and his brother Ralf, Wimbledon champion Michael Stich and Tour de France runner-up Jan Ullrich are just some of the prominent Germans who have escaped the country’s high taxes by moving abroad.

The criticism did not impact Germany’s high tax regime. In fact, German citizens and business entities have, on the contrary, boast having among the best tax compliance records in the world. In pursuance of its crusade against tax-evasion and money laundering, Germany had handed over a list Indian tax evaders to the previous UPA government. India is yet to act on the information. It is time that the government makes some sincere effort to unearth billions of dollars of black money openly held in the country and use them for its infrastructure and economic development and to control inflation. India, like Germany, should not buckle under any pressure from any quarters. IPA
Nantoo Banerjee

Nantoo Banerjee

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