To Be or not To Be ?

Shakespeare would say , " That is the question "

For Federal Reserve Board of Revenue ( Pakistan ) , that question was ,

"  What to publish ?  And what not to publish ? "

It seems , in Pakistan , only 1 million people [ out of a population of 140 million ] , pay income tax

Finally , the Board published the names of those 1 million ( running into a 17,000 page directory ) , with the amount of tax paid by each

To give to Pakistan , a loan of $ 6.7 billion ( approx Rs 41* Thousand * Crores )  , the International Monetary Fund ( IMF ) , insisted on such a publication

Now , in India , we have 40 million people who pay personal income tax ( out of a population of approx 1220 million )

Obviously , for India's Income Tax Department , it would be an impossible task to publish their names in a directory - which could possibly run into 17,000*40 pages  !

Then again , India has no need for an IMF loan , what with its Personal Income Tax revenue amounting to , Rs 2.47*Lakh*Crores

And if the incoming government at the Centre , dares to implement my suggestion of INVERSE TAXATION regime , that revenue could go up 100 times  !

Simply , " Inverse " the tax slabs as follows :

>    Up to  Rs 2 lakhs..................... NIL

>    2.1 - 5.0 lakhs......................   10 %

>    5.1  - 10 lakhs.......................   8 %

>    10.1 - 20 lakhs......................   6 %

>    20.1  - 50 lakhs.....................   5 %

>    50.1 - 100 lakhs.....................  3 %

>    Above 100 lakhs...................... 1 %

What is likely to happen with such " INVERSE  TAXATION  " regime  ?

Following few things :

>  Total personal tax payer base will go up dramatically from current 4

     crores tax-payers

>   Total personal tax collection too , will rise dramatically

>  with this " INVERSE  TAX  REGIME " , there will be no incentive to  evade

    taxes and to generate " BLACK  MONEY  "

>  There will be no resistance to accept ALL payments by cheque / electronic

     clearance  !

 >  The more you disclose as your income , the less you pay by way of taxes

     ( Of course , incrementally  )

>  For a change , we will learn to reward honesty / efficiency / productivity !

    No need to bribe those Income Tax officers  !

>  Lakhs of crores of BLACK MONEY , stashed away in bank

     lockers / gold / land - and , of course those Swiss bank accounts  - will ,

     become " WHITE  MONEY " , overnight  !

>  There will be a huge surge in bank deposits ( - even with , the inevitable

    lower interest rates )

>  Banks will be awash with funds to finance businesses / infrastructure

    projects etc , encouraging entrepreneurs / self-employed to set up new

   businesses ( at 2 % interest rates of loans ) and generate millions of jobs

>  There will be a phenomenal rise in Capital Markets

Only questions are  :

>  To innovate or not  ?

>  To think out-of-the-box or not  ?

>  To feed poor or to teach them how to fish  ?

>  To enable people to earn more or to subsidize their expenditure  ?

  

>  To let people stand on their own legs or continue "Dependency Culture" ?

>  What is possible ?  To reverse the human greed or try and  harness it  ?

*  hemen  parekh  ( 18 April 2014 / Mumbai )