Thank you, Shri Gopal Krishna Agarwalji,

 

Thank you, Shri Gopal Krishna Agarwalji,

 

{ Communication & Coordination Committee – BJP / gopalagarwal@hotmail.com / nraodrs@gmail.com )

Context :

BJP pushes budget relief for middle class, business in wake  of virus  /  TOI – 01 Jan 2021

Extract :

Ø  BJP feels that while the poor received free rations and businesses got state guaranteed loans and other concessions, the economy will benefit from slimming the tax bill for the middle class with more generous standard deductions

 

Ø  “ The middle income group is feeling the pinch, and they need some support “, said Gopal Krishna Agarwal , who handles the BJP’s communication and coordination on economic affairs

 

Ø  “ Incentivizing consumption by them would also help the industry “ . Agarwal said , “ I can say the budget will take care of the middle class “

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Dear Shri Agarwalji,

 

Without doubt, you have a much better understanding of economics – and of the many opposing demands being made to Smt Sitharamanji ( for incorporating in the forthcoming budget )

 

In this context, asking her to totally abolish Personal Income Tax, might even sound ludicrous at first glance – although, let me add hurriedly that “ no political party dare oppose this “ ( since all MPs – MLAs and non-elected political leaders, can miraculously – and officially – double their income within a year ! )

 

But before throwing it out the window, I urge you to have its following merits debated in BJP Executive Committee

( source :  What would happen ?   / 29  Sep 2017  )

Extract :

What may not be so obvious to the Policy Makers is that, such a BOLD / UN-ORTHODOX / OUT-OF-THE-BOX , step would set in motion a VIRTUOUS  CIRCLE , where following things will happen :

  

*   There will be no incentive for tax evasion / avoidance. This will be a permanent

     FULL STOP to future generation  of Black Money 

   
     

*   With NIL personal tax to pay, all the cash ( black money, no doubt ! ), lying in

    bank lockers , will get deposited in official bank accounts, within one year

     

 

*   All payments will be received by cheques and deposited in Bank Accounts

 

*   All stashed away Black Money will , somehow , on its own , find its way in bank

    accounts, - including Black Money lying in Foreign Banks , making SIT 

    redundant !

    

     
*   Savings rate will go up dramatically

*   That will lead to greater purchasing power for all people

*   Leading to higher domestic consumption of FMCG / Consumer Durables

*   This will result in huge collection of GST, offsetting revenue losses

*   Demand will go up, boosting manufacturing

*   With rise in manufacturing, sub-contracting/outsourcing will increase, giving a

     big boost to MSME sector

 
  
*   If manufacturing goes up, employment / self-employment,  will go up

*   For a change, we as a Nation, will learn to celebrate , 

     #    Wealth Creation as a means to reduce poverty

     #    World-size Companies to take on the World

*   There will be less pressure on demands for higher salaries / wages

*   If salaries / wages do not rise, inflation will ease

*   Cost of manufacturing too, will go down

*   Era of " Low Cost Economy " will set in  VIRTUOUS CIRCLE ?

*   Savings will move from gold / land to Financial Assets

*   With a low cost structure, our products/services will become, internationally 

     competitive and exports will go up

*   That will improve our current negative Trade Balance / CAD

*   This ( abolition of Personal Income Tax ) MUST be coupled with SPVs for  :

     #    Infrastructure Projects ( especially Smart Cities / Corridors etc )

     #    Educational Institutions

     #    Skill Development Institutions

     #    Health care Facilities

     #    Solar Power ( Eqpt Mfr / Generation / Transmission / Distribution )

     #    Digital India ( Broadband ) Network


     No questions must be asked as to the source of money invested in such SPVs

    All income ( Corporate Income or Personal Income by way of dividends / 

    interests etc ) arising out of investments made in such SPV, must be tax-

    exempted SPVs , themselves, must not need to pay any taxes for 10 years

           

        Take away incentive to evade taxes, thereby stopping future generation of Black

        Money

     

   Channel all existing Black Money ( locked up in assets, in India or abroad ) into

   the main stream of economy ( Infrastructure Building )

   

 *    Enable current annual inflow of inward remittances from overseas Indians to

      go up from $ 70 Billion to $ 700 Billion

      

   *  Through rapid development of Infrastructure, generate Self Employment for

       12 million youth every year

     

*    Drastically reduce FDI requirement for rapid growth of economy

 

 *    By cutting down on government outlay for Infrastructure, reduce govt

      borrowing from market and consequent debt servicing

       

*    Raise GDP to 10 % by 2018

  

Why is  such a BOLD  step urgently required ?

 

 Current tax regime ,

 

 *   Punishes honest people

 

 *   Penalizes wealth creation

 

 *   Encourages creation of " Black Money "

 

 *   Provides incentive for tax evasion

 

 *   Diverts resources into unproductive assets such as cash/gold/land etc

 

 *   Stops people from working harder / smarter

 

 

With this regime, people tend to ask :

 

 *   Why should I work hard and earn more, if the more I earn the more I pay  ?

      

 *   Why not evade paying taxes by hiding real income ?

 

 *   How will I ever be able to buy that 1 room flat costing Rs 50 lakhs ? I need Rs

     20 lakhs by way of black money to buy it ! Where do I get that ?

    

 *  For every rupee that the government collects from me as tax , only 15 paise

    come back to me in the form of civic amenities .

   

    

Dear  Policy Makers :

 

 This is the SIMPLEST – EASIEST – CHEAPEST way to revive our ECONOMY , in a permanent manner , without ever needing any other stimulus

 

 There is no stimulus greater than the Human Greed !

 

===================================================

RELATED READINGS :

Listen to the Lone Voice !...............................[ 28 Sept 2019 ]

Don't Ask " How " ?  /                                     [ 07  Apr  2014 ]

White Holes of Black Money ?                          [ 03 June 2014 ]

A CASE FOR ZERO PERSONAL INCOME TAX      [ 11 Nov 2014 ]

Better late than Never                                     [ 20  Sep  2019 ]

===================================================

With regards,

Hemen Parekh , hcp@RecruitGuru.com  /  04 Jan 2021

 

PS :

At this moment when I am recommending total abolition of Personal Income Tax, it would appear incongruent if I were to suggest treating (currently tax-free) FARM INCOME as “ Personal Income “ and tax it accordingly !

Perhaps only for a Farm Income of Rs 10 lakhs / year, and above (will touch less than 1 % of our 120 million farmers )

 

Dear Shri Tomarji,

In today’s negotiations, if Farmer Unions insist on withdrawal of Farm Laws and guarantee for MSP, this could be your “ Bargaining Strategy “ – since those sitting opposite you fall within those 1 %  !