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Created on Friday, 21 April 2017 03:31
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(Image Courtesy: pwc's Paying Taxes 2017 report)
The flavor of fiscal policy as growth accelerator remains as refreshing as ever. The freshness implies the scope for more fiscal corrections notwithstanding implementation of numerous tax and expenditure reforms in different countries.
Multilateral institutions are thus once again putting on policy makers’ platter the idea of tweaking fiscal policy to spur economic development.
G20 Finance Ministers and Central Bank Governors, for instance, have pitched for such approach. In a Communiqué issued after their meeting in Germany held last month, they observed: “Fiscal policy should be used flexibly and be growth-friendly, prioritise high quality investment, and support reforms that would provide opportunities and promote inclusiveness, while ensuring debt as a share of GDP is on a sustainable path”.
The scope for growth-stimulating innovation, both on the taxation and the expenditure side, is ample in many countries. The challenge lies in combining growth-aiding tax policies with expenditure policies that direct larger investments in infrastructure, which acts as plank for growth of different sectors.
International Monetary Fund (IMF) has thus aptly focused on ‘Upgrading the Tax System to Boost Productivity’ in its latest Fiscal Monitor released on 13th April 2017.
According to Fiscal Monitor, “Potential TFP (total factor productivity) gains from reducing resource misallocation are substantial and could lift the annual real GDP growth rate by roughly 1 percentage point. Payoffs are higher for emerging market and low-income developing countries than for advanced economies, with considerable variation across countries.”
Read more: Trash tax distortions to perk up economic efficiency & growth
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Created on Friday, 14 April 2017 15:57
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(Image Courtesy: taxindiaonline.com)
Is a tax evasion scam building under the benign canopy of Digi-dhan/cashless economy? Is the Government legally and technically equipped to prevent growth of digital black money?
With due apologies to experts who have pitched digital payments as means to reducing tax evasion, we have to address such emerging issues for two reasons. First, India can’t shut its ears to alarm bells ringing abroad over digital tax frauds.
Authoritative studies show that several developed and emerging economies are losing billions of dollars of revenue every year due to digital tax evasion. This is notwithstanding tightening of regulatory framework for usage of point of sale (POS) terminals, a major driver of both digital economy and black money.
As put by Capgemini Consulting , “digital technologies are a double-edged sword. These smart technologies are also giving rise to new types of digital tax fraud”.
In a recent paper captioned ‘Taming Tax Fraud’s New Digital Frontier: What Can Tax Authorities Do to Take on Fraudsters and Win’, Capgemini says it has modeled the evolution of tax fraud, taking into account new incidences of fraud enabled by digital technologies.
Read more: Will India let digital tax swindlers have a free run under Digi-dhan?
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Created on Monday, 27 February 2017 18:12
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(Excerpted Image from ITD's Black Money Advt.)
Demonetization has turned torchlight on the Finance Ministry’s handicap in minimizing black money generation and in catching tax evaders.
The handicap is glaring in Ministry’s ongoing process to hire three consultancy firms to analyze demonetization data for netting income tax evaders.
The private firms’ work would thus overlap Operation Clean Money (OCM) launched by Income Tax Department (ITD) on 31st January. OCM was rolled out a month subsequent to Prime Minister Narendra Modi promise that he would give a ‘clean country’ after December 30, 2016.
The ground realty is that dream of ‘clean country’ and ‘clean GDP’ is far as the moon. Daily reports of post-demonetization seizure of black money and fake new notes are a telling commentary on the Dream.
Ironically, ITD’s move to hire three consultancy services comes in the run-up to scheduled commissioning the first phase of its 3-phase computerization project named Insight in May 2017. The Project envisages strengthening and consolidating ITD’s data warehousing and business intelligence (DW&BI) infrastructure and skills.
In July 2016, ITD stated Insight “would play a key role in widening of tax-base and data mining to track tax evaders.”
Read more: Govt’s Limitation in Demonetization Analytics Should Rekindle Tax Reforms
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Created on Tuesday, 17 January 2017 03:08
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Facts contradict PM’s claim on Benami Transactions law
(Image courtesy: nationalmuseaumindia.gov.in)
Prime Minister Narendra Modi has distorted the country’s multi-law battle against benami deals in his zeal to take jibes at the Opposition particularly the Congress and Left parties.
Benami Transaction Prohibition Act (BTPA),1988 has been enforced and repeatedly taken cognisance of by the judiciary except for the unimplemented provision that enables authorities to seize benami immovable property.
Moreover, the anti-benami/anti-fictitious provisions have been incorporated into corporate, banking and other enactments & regulations over the decades.
Modiji’s digitally-supercharged advisors should have searched Supreme Court (SC) website to access judgements that have factored in BTPA. Such an approach might have restrained PM from using BTPA gun to take pot shots at his political rivals.
Before putting the entire domain of benami (literal meaning without name) in perspective, consider what Mr. Modi has stated on BTPA post-demonetization. In his ‘Mann Ki Baat’on 25th December 2016, he stated: “You are possibly aware of a Law about Benami Property in our country which came into being in 1988, but neither were its rules ever framed, nor was it notified. It just lay dormant gathering dust. We have retrieved it and turned it into an incisive law against benami property”.
Speaking at BJP Parliamentary meeting on 16th December 2016, PM referred to BTPA and quipped: “For some reason or the other no regulations were issued under the act. In other words, it remained unimplemented for more than twenty five years.”
A plain reading of BTPA would show that our beloved PM is twisting facts.
Read more: Couple Reforms with Penalties to Checkmate Benami
