Abolish Income Tax, Levy 8% GST after bringing black money from abroad, says Dr Swamy
Moneylife Digital Team 27 October 2017
Dr Subramanian Swamy, senior leader of the Bharatiya Janata Party (BJP) on Friday called for abolition of income tax and levy only one tax, the goods and service tax (GST) at 8% after bringing black money stashed abroad .He was speaking at a book release event organised by Moneylife Foundation and BSE in Mumbai. 
 
Dr Swamy said, "For black money, there are two symptoms. One is flow and second is stock of black money. Prof Vaidyanathan's estimate of Indian black money stock is Rs65 lakh crore. Illicit wealth stashed in tax havens abroad by Indians should be declared as national wealth and directed to be transferred to India under the United Nations’ Convention on Corruption."
 
The International Convention Hall of BSE where the programme took place was filled to the capacity. The attendees included many eminent lawyers, chartered accountants and senior consultants as well.
 
 
"Black money has become a national security threat, corroding the country. The new age thinking that 'money is everything' is destroying the economy, that, money is not an index of social wellbeing", Dr Swamy added.
 
He says, How much time did they take for Hosni Mubarak's accounts to be seized? They took seven months. Same thing with Gadhafi. In case of Marcos, it took a year and a half and that was 1991-92. Things have become much tougher because of terrorist financing and tax havens, and two countries US and Germany are very sensitive to this. Therefore, I think we should not go for a system where we are lenient to those who broke the law. In India, we appear to be lenient to those who break the law to the extent that those who adhere to the law are found to be silly. It is imperative that India's black money be brought back using the United Nations’ Convention on Corruption and a big chunk of it should go into savings and investment in the Indian economy."
 
While elaborating on how the black money can be used, Dr Swamy said, corruption had affected the economy, politics and national security. "Apart from bringing back the black money we need to prevent its creation. Abolishing participatory notes (P-Notes), personal income tax (I-T) and registration charges for real estate is one of the ways to curb creation of black money," he added.
 
Dr Swamy says, "Even today, the tax rates, in my opinion, are unacceptably high. We have a need to have a much higher savings and if you abolish income tax, there would less paperwork, which is there due to the exemptions. If you abolish the income tax, then you begin the new process where fresh generation of black money is going to be discouraged as a consequence." 
 
According to the former cabinet minister, some of the black money is sent abroad, while some kept here in India and spent on buying and developing land, especially for building luxurious houses with Italian marble and luxury items. About 75% of our investment is allocated for luxury industry. Another way to spend black money was through P-Notes, where money deposited abroad via hawala route is brought back to as P-Notes and invested in the stock markets. This got boost with the Mauritius treaty and much more money sent abroad through hawala came back to India after this.
 
Black money or kala dhan is a topic that has elicited much debate in recent times. The debate has been mostly marked by mud-slinging and name-calling and the discussions that have ensued often have no basis in fact. While most people have a hazy notion of black money, only a few understand it in its entirety.
 
Few years ago, the BJP leader had claimed that "black money is no more in Swiss banks". However, no one believed him at that time.
 
The BJP has decided to mark 8th November, the first anniversary of the Union government’s decision to demonetise high value currency notes, as 'anti-black money day' across the country. The BJP’s move comes as 18 Opposition political parties had announced their own programme of marking the day as a “black day” terming the decision to demonetise as “ill-conceived and hasty”.
 
Commenting on this, Dr Swamy says, "During demonetization, we should have printed more Rs100 notes. On 8th November what the Prime Minister should announce is mission 'Bring back black money' over the next year. We should continue to mobilise our resources like from the auction for spectrum, and coal blocks. By abolishing income tax, we can reduce black money by almost 50% and then people will not have to stand in Qs".
 
In 2015, the National Democratic Alliance (NDA) government set up a Special Task Force to unearth black money. 
 
Earlier, Dr Swamy released "Black Money & Tax Havens", a book by Prof R Vaidyanathan. 
 
 
According to Prof Vaidyanathan, estimated black money in India could be 10% to 20% of our gross domestic product (GDP) or about Rs15 lakh crore, considering our GDP of Rs150 lakh crore for 2016-17. "Indian money in tax havens across the world could be about Rs65 lakh crore. The issue of tax havens is perhaps even more misunderstood. Most people fail to see the connection between tax havens and black money," he said.
 
In his book "Black Money and Tax Havens", Prof Vaidyanathan provides the reader with a brief overview of black money—its generation, its estimates and how and why it is spirited away to tax havens. He also lays bare the danger that is posed to world financial wellbeing because of the lack of political will to tackle them.
Comments
Dawa Tsering
4 years ago
1 tax n simple paying will increase enterpenuership....
Mohan Parvate
4 years ago
I am inclined to agree with him
Gajula Chandrasekhar
4 years ago
My salute Dr.swamy, enlighting at should have done by govt. As retd bank official, where pension has not been revised whenever wage revision is done every5 years. After retirement we get only 50%of salary last drawn, but govt charging again income tax on our meagre pension. If at charged , the slab should be double the slab of regular employees. But it is not so. After serving for 30 to 35 years service, govt again taxing. All aged retd employees have no medical insurance from bank, major portion of pension we are spending for hospitals. Pension, DA not revised after 20 years, when ever wage revision take place. This is not so with state and central employees. Banks also govt of undertakings and owned by govt. But injustice done to re5d employees. So request to abolish IT for retd bank employees,
c babu challa
4 years ago
Black Money and TAx heavens has brought out some good facts and subramanyam swamy came out with some real solutions. As Prof. Vaidyanathan says, the black money in tax heavens is pose problems to world financial well being. the govenrments past and present have failed to address the issue of bringing back the money from the tax heavens. Public have been fooled and are being fooled on this count. CBI, IT and ED can easily unearth money stashed in remote places and in secret locations, but could not raise even a case againt Mr.Jay Shah, son of Amit shah. This is a glaring example of the functioning of the agencies and government intent.
B. Yerram Raju
4 years ago
It is good to be sensational some times. Why not he think of recommending a share transaction tax of just 2 to 3 percent it can take away all other taxes and GST can be reduced to 8% with States also getting the share of STT after due deliberation.
Mukund Rajamannar
4 years ago
Dr. Swamy's ideas are forward facing and seem to be ignoring the political garbage that is in international politics. Any runaway corrupt businessman in India finds a safe haven in the UK for example. Lalit Modi, Vijay Mallya, etc. These countries enjoy the revenue bought in by these actors and they aren't interested in fixing India's local problems. Even if we go via the UN way, that is a toothless snake. One move that can fix local problems is judicial reforms, but our collegium prefer to go extinct than to adapt to transparency. Income tax is a minor portion of the tax revenue in any case. Again with India's federal structure, pushing GST was possible only if current levels of taxation were allowed. So we have these ridiculous slabs of taxation in GST. Those need to be unified eventually after the states get the confidence that they don't have a revenue loss and then normalised to a lower rate.
S K Rai
4 years ago
I agree with Dr. Swamy
Manoj
4 years ago
As an ex govt employee, I've seen such wastefulness and extravagance in govt expenditure that words like criminal negligence would not do justice to it. Forget running after impossible dreams like black money recovery or income tax abolition. Just create laws about fiduciary responsibility of government funded projects, using means like RTI, and we all will see govt expenses shrink by 40-60%. Instead of fueling the inflation and corruption cycle, govt will chase innovation to only take up productive projects and will of its own shed white elephants. That will improve taxmans credibility and hence compliance.

I know what I'm suggesting is avant garde, but someone like Modi can at least do this, its totally within his control. But no, he too, just like congress is going on announcing thousands of crores of projects to each state, and letting money be siphoned off from these projects because they are not going to be benefical to the economy in any way.
Yogesh Aigalikar
4 years ago
I think confidence in such ideas shall grow further if we actually start seeing some money received back by our country.Action is long overdue .
Satish Shenoy
4 years ago
Successive governments have only focused on increasing tax revenue. No government has focused on reducing government expenditure on staff salary, pensions, running loss making PSU's like Air India, offering interest free loans, writing off loans, providing subsidies to vote banks etc.
If any government targets the expenditure side and stops wastage of money, then the tax collection can be automatically reduced.
Unfortunately, this is not on the agenda of any government or political party.
JAYENDRA PANDYA
4 years ago
WHEN IT COMES TO TALKS ABOUT ABOLITION OF INCOME-TAX, IT IS AN UTOPIAN IDEAS. WHEN IT COMES FROM AN ECONOMIST OF DR SWAMY'S STATURE IT HURTS. IT IS NOT POSSIBLE FOR A OVER-POPULATED COUNTRY LIKE INDIA, A DEVELOPING ECONOMY. IT CAN BE A DREAM. SUGGESTIONS FOR CURBING IT I WELCOME HIS SUGGESTIONS. BUT I AM MORE INTERESTED IN PROF R VAIDYANATHAN'S BOOK BECAUSE IT IS VERY INTERESTING TO READ HIM. HE HAS ALL THE STATISTICS UNDER HIS SLEEVE. AND THEY SAY ONE WHO HAS IT CAN PROVE ANYTHING. I WILL SURELY LOOK FORWARD TO BUY HIS BOOK AND READ IT.
Manoj
Replied to JAYENDRA PANDYA comment 4 years ago
Sir, we are very good at ivory tower discussions. If Modi is so committed to nation building as he claims to be, and is not just using it as subterfuge to hold on to his chair, why does he not let Swamy's suggestions be implemented in one state or one city and see the results after a year? He wont, because he's no angel, he's a product of the same power and money hungry system that has earlier thrown up people like VP Singh, Kejriwal etc claiming to be crusaders but proving to be as bad as anyone else at governance.
Jawahar M
4 years ago
Well said. We expect more from You. We hope that your idea will definitely have some effect.
t j ethiraj
4 years ago
This is what p.chidambaram told when service tax was introduced.IT never abolished and service tax continued.The govt must curb expenditure on governance and necessary for taxation will come down.IT is an accepted evil eradication will encourage GST evation.On the other hand agriculture,political party ,politician must be taxed say 1% of gross income.Dr SS statements will have his own personal agenda.
naresh.gulati
4 years ago
Although the GOI appointed in 2015 an SIT for tackling black money. There is possibly no or not much information about the progress made in the matter. The govt should bring out a status report for public, which would also enable it to review the matter.
Author Satyabrata Biswas
4 years ago
Swamiji, must get a good portfolio in ministry - Modifiedji.
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