Monday, March 7, 2016
Why so much of a problem of widening the Tax base, when we know the biggest culprits who don’t pay tax. Just go after them!
The Govt. as usual is making a mountain out of a molehill! They are having top level discussions with the very poachers who advise their clients on how to avoid tax, and ask them how to increase the base! What a joke!
For starters, it is the Top Lawyers, get the 150 top names, find out how much income tax they have paid last year. That is so simple a figure to get. Then you can write a polite letter, telling them that they are living in the Country with the lowest tax rates, and even with a successful country like in the UK they would be paying 50% tax, and for them to declare all their income and pay the reasonable tax thereon. At first you must be subtle and polite, explaining that they have had a long innings of not paying tax, and they should somehow bear the pain, as otherwise they will be asked to give each client a detailed bill in future to back up any charge they give, and notice will be put in the papers, asking clients to disclose who, and how much they have paid!
In a similar fashion, look at the top 150 tuition masters in the Country, look at the top 150, car dealers in the Country, whose complete profits after taking into account their consumption, is in the form of their vehicle stock, some have vehicle stock running into Billions, as they have never paid a dime in tax on profits, as they are not even registered companies, being individuals without even a tax file.
If we are to keep to the 150, then take the top 150 doctors in the Country, and look at their tax payments, and do that for the top 150 Hardware Shop owners in the Country, and from this 750 people you can assign one tax collector to each and say that they have to collect Rs100M each, and hey presto at least Rs75B will collected at the first instance, within 6 months of this program starting.
Why is it so difficult to adopt? The threat of prosecution is enough to get them to heal. The problem is that all 750 are so well politically connected, the Govt. does not want to upset their friends, it is only the PM who has the guts to go for them, and it is time they pay their full whack, as they have had a free ride for so long.
Once that experience is in the bag, the newly empowered tax collectors who will be given a commission of 10% of their collections, who will now be riding around in Benz cars, will know how to find the other 750,000 tax payers, and in 5 years, the tax yield on direct tax will jump from 10% to 17.5%, trust me. So don’t waste time fiddling while Rome burns. Remember the tax experts are the last people you will consult on this issue! Just do it!