Take the Wind out of their Sail

When the Lok Sabha reconvenes this morning , expect fire-works !

12 opposition parties , led by Congress , will shed crocodile tears to show their sympathy for the difficulties / harassments / pains suffered by millions  ordinary citizens since demonetization announcement of 08 Nov ." They have lost their livelihoods ", they will say

With forthcoming elections in UP - and 4 more States - , how can they afford to miss out such a golden opportunity to attack the government as being " Anti Poor " ?

Government will argue that ,

*  Things will return to normal in 8 / 10 days

*  Already Rs 5.5 lakh*crore worth of Rs 500 / 1000 notes have been deposited in bank

    accounts . By March 2017 , this will exceed Rs 10 lakh*crore . Balance of Rs 5 lakh*

    crore will get burnt or dumped into rivers

*  Next ( after 30 Dec ) , we plan to attack all Benami Properties where Black money is

    locked up ( for which , it was essential to maintain , utmost secrecy )

But , all of these valid arguments will get drowned in the din !

However, there is a surefire way in which the Government can silence the opposition

By Prime Minister announcing the following in Lok Sabha , at the very outset

( suggestions which, I sent to NDA Ministers through emails shown below ) :

#   Email date :  01  Oct  2015

 

*   Abolishing Personal Income Tax ( source of the DARKNESS of CORRUPTION )

*    Stop asking any questions as to the " Source " for all cash deposits 

      made into bank accounts opened under Jan Dhan Yojana

*    Levy a Bank Transaction Tax ( BTT ) of 2 % to yield revenue of 

      Rs 15 lakh*crores , which would be 5 times the loss of revenue due to

      abolition of Personal Income Tax

*    Encourage deposits made into Jan Dhan bank accounts to be invested in

      SOLAR POWER SPV Farms , by direct depositing of income derived ( 

      from sale of electricity to DISCOMs ) into those bank accounts

#   Email date :  22  Sept  2015

*  Enact " Start Up Act - 2015 "

*  Abolish Personal Income Tax for Start Ups registering on web site of 

   Income Tax department ( must file ZERO TAX return for 10 years )

*  No questions asked re source for all investments made in Start Ups ,as

   long as this cash gets deposited in the bank account of that Start Up 

#  E Mail date : 18  Sept  2015

The only FINAL / LASTING solution is :

Abolish Personal Income Tax

Simultaneously declare :

No questions will be asked for any amount of cash deposited in bank accounts by individuals ( of course , with linkage to PAN / Aadhar / RuPay card etc )

Sure , Government will lose Rs 2.5 lakh*crores by way of tax revenue,

received from some 3 crore individual tax payers

But , Abolition of Personal Income Tax ( and no questions asked re bank deposits ) , could lead to 30 crore persons , each depositing Rs 1 lakh into their bank accounts ! 

 {  Not unthinkable , considering that during past one year alone , Rs 20,000

   Cr got deposited in 20 crore new bank accounts , under Jan Dhan Yojana  }

 So , we are talking of bank accounts swelling by  Rs 30 crore*lakh  !

Even if that money earns the depositors , only 3 % rate of interest !

And banks will give out these moneys as loans to Corporate @ 5 % interest rate  ! 

Trillions of BLACK MONEY Rupees will become " Productive Assets "

And , Corporate World ( + our Finance Minister ) would not need to keep begging RBI for a " Rate Cut " to boost the economy !

To keep growing at 10% rate , we have got to make ours , a :

LOW  COST  ECONOMY 

#  E  Mail  date  :  04  Jan  2015

*   " Inverse Taxation Regime " both , for Personal Income Tax as also for Corporate Tax

       The more you earn , the less tax ( rate on next higher slab ) you pay

*   For Corporate , the more people you employ , the less tax ( rate on next higher slab ) you pay


*   Even total abolition of Personal Income Tax


There are over a dozen Countries where there is NIL personal Income Tax

So , there is a precedent that this can work  !

If Personal Income Tax was to be totally abolished , what can / may  happen ?


*   There will be no incentive for tax evasion / avoidance 

     This will be a permanent FULL STOP to future generation of Black Money

*   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 !

   This is the ONLY WAY , NDA  government can redeem its promise !

*   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 ) should 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 

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Dear Shri  Modiji :

*   Today , is the time for your NEXT Surgical Strike / Master Stroke

*   Take away the empty thunder of the Opposition

*   Render the Opposition " irrelevant  "

*   Forever , silence your critics with these " Declarations of Intentions "

*   Make 21st Century , the INDIAN  CENTURY  !

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16  Nov  2016

www.hemenparekh.in / blogs