A single-point tax deduction at source in the form of Bank Transaction Tax or BTT is what is required. Every transaction routed through banks can attract this tax or certain deduction.
Abolish all of them and introduce a single-point tax called Bank Transaction Tax. That will curb black money, argues ArthaKranti Pratishthan President Anil Bokil
One of the five suggestions made by ArthaKranti for a healthy economy is doing away with the existing tax system, except customs and import duties. It is imperative to scrap all Central, State and Local Body Taxes, be it direct or indirect, as taxation and tax evasion is the root cause of black money. Right now, there are 32 taxes we are required to pay.
A single-point tax deduction at source in the form of Bank Transaction Tax or BTT is what is required. Every transaction routed through banks can attract this tax or certain deduction. The percentage of deduction can be calculated by the Finance ministry and the Reserve Bank of India.
For example, if there is a BTT of 2 per cent, a certain percentage can be credited to Central and State governments and local bodies. It could be like 0.7 per cent, 0.6 per cent and 0.35 per cent, respectively. The transacting bank can also be offered a share (say 0.35 per cent) since they play a key role.
ArthaKranti has been pleading for zero tax on cash transactions and has suggested the withdrawal of high-denomination currency. In fact, it is for scrapping all currency notes above Rs 50. Most advanced nations do not have high-denomination notes. The government should make legal provisions to restrict cash transactions up to a certain limit, say Rs 2,000, and any transaction above that amount should not be given legal protection.
After its formation 16 years back, ArthaKranti proposals have been presented to a number of luminaries, including former President Pratibha Patil, LK Advani, Suresh Prabhu, Subramanian Swamy, Vijay Kelkar, Suresh Tendulkar, Nitin Gadkari and Prime Minister Narendra Modi.
Modi, who was then Gujarat Chief Minister, had assured to implement the proposals way back in November 2013. He needs to be congratulated for the ‘domestic surgical strike,’ which would lead to economic reforms. But there is a need for post-operative care.
The next step should be the abolition of all taxes and the introduction of BTT. A correction in the tax regime can prevent the generation of black money and make the economy healthy. ArthaKranti has also called for state funding of elections and political parties can be funded in proportion to the voting percentage they enjoy. It would eradicate black money.
(As told to Shailendra Paranjape. ArthaKranti Pratishthan is an NGO which has been propounding various suggestions to curb black money and create a healthy economy.)
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