I know topic is not suitable to every type of readers. I know my all
blog readers are not directly concerned with Indian tax, but also wait go on
reading don’t click next blog. Here is some fantastic fact for you.
Amsterdam has a house with narrow staircase and hooks over big windows.
Since property taxes were based on the frontage of houses, so the builder make
narrow frontage and so were the staircase. Furniture could not be dragged up
narrow staircase. Hence, furniture was lifted through staircase which explains
the hooks.
Britain did not have a permanent income tax till 1842. As a source of
revenue, there were property taxes and it seemed an eminently good idea to link
property taxes with number of windows in a house. The richer the owner, the
more the windows the house would possess. England, France, Spain and Scotland had
such window taxes
As a result people walled up windows or built the houses with fewer
windows. No wonder houses in many part of Britain are dingy and dark. As a principle
it is far better to have direct taxes like income taxes.
Now if you are really interested to
read about Proposed Banking Transaction Tax you may click the button read more.
A bank transaction tax is a tax levied on
debit or credit entries on bank
accounts. It can be automatically collected by a central counterparty in
the clearing or settlement process.
ArthaKranti
proposal
As mentioned by their website
The ArthaKranti proposal is a well-researched scientific approach designed to completely
transform the current Indian socio-economic scenario. This approach will enable 'Principled, Prosperous and Peaceful living' for all citizens of our country.
This proposal is politically neutral;
it is open for adoption by any political party at national level. On adoption,
it can practically and concretely strengthen the people friendly agendas of
political parties!
Agendas of
proposal
§ Withdrawal
of existing Taxation System completely (except customs i.e. import duties).
§ Every
Transaction routed through a bank will attract certain deduction in appropriate
percentage as Transaction Tax i.e. Single point tax deducted at source. (say 2
%).
§ This
deduction is to be effected on receiving/credit accounts only.
§ This
deducted amount will be credited to different Government levels like Central,
State and Local (say 0.7%, 0.6%, 0.35% respectively).
§ Transacting
Bank will also have its share in this amount as the bank has a key role to
perform (say 0.35%).
§ Withdrawal
of High denomination currency (say above Rs. 50).
§ Cash
transactions will not attract any transaction tax.
§ Government
should make legal provisions to restrict cash transactions up to a certain
limit (say Rs. 2000).
Advantages of implementation of ArthaKranti
Easy collection of revenue
Government and gov. authorities shouldn't hassle a lot regarding
collection of income taxes.
No separate arrangement for
tax payment.
As tax is collected in transaction directly you needn’t hassle to make
the separate arrangements of tax
Fair and healthy business
competition.
With uniform taxation throughout the country, price levels throughout the
country can be virtually equal. The distorting influence of local taxes is
removed so we will have a common market in this country for the first time.
This will result in fair and healthy business competition.
Long term business
decisions.
Industry can chalk out long-term policies for the growth of business,
without fear of government policies abruptly changing and affecting investment
decisions.
More focus on service and
quality.
as the taxes are automatically collected on transaction there is no need
to devote any resource and efforts towards it. Because of this companies may
focus themselves more towards their services.
Disadvantages/effects of implementation of ArthaKranti
Regressive model of tax
The
BTT, however, does not differentiate between the rich and the poor. Anyone with
money flowing into his bank account will be charged a 2 per cent tax on this
amount. Whether it is a businessman, who makes Rs 1 lakh a day, or a humble
peon, who earns the same amount in a year, will be subjected to the same tax
rate.
Roughly 50% of indian don’t
have bank accounts(source ET 24th January)
If the above statement
published in the leading financial newspaper holds true then it will be disaster
for indian economy to tax in banking transactions removing all kinds of direct
income taxes.
Rise of black money
Because of bank transaction
will be charged with tax there will be rise in black marketing. Although proposal
has stated that limitation of cash transaction upto 2000 this is hard to be
implemented.
Increased cost of
production
Manufacturers will not get
credit on taxes they pay in inputs, unlike,say, value-added tax. This will
raise the cost of production and make products more expensive for consumers.
BTT is cascading in nature
This model of taxation doesn't provide any input credit system as a result it is cascading in nature. Although
the rate is very less (2%) it can’t be said that cascading has no effects at
all.
Not enough Bank
This is one of the root problems.
Although they (artha krantikari) have said that number of banks can be
increased and additionally mobile banking and NFC (near field communication)
banking system can be implemented.
My personal view
I am giving a neutral view.
I don’t have any give and take relation with Ramdev Baba or any of his
association. I personally have seen many drawbacks of system. Keeping commercial
bank as a center of economy by removing all kinds of taxes won’t be a good
system. And charging 2% in every transaction is very high (from my view point).
I will rather do cash transaction than to bank it. (I think many will do the
same if this proposal becomes law).
In present scenario too one
does everything possible to hide the tax. They hire CA, Consultants just to
save their tax portion and do cash transaction utmost possible.
I am not opposing just
because religious guru is doing it and also not supporting because religious
guru is doing it.
I have tried my best to
give independent opinion from my own side. Along with this article I have started
poll in this blog please vote your choice.
Please provide me your feedback after reading this article. I am highly enthusiastic to know your views about my article. You can comment here as well as mail me at "mailfordipendra@gmail.com"
your fan
Dipendra pd. Poudel
(www.facebook.com/infodipen)
sources
www.arthakrantikari.org
Wikipedia
www.sabhlokcity.com
Economic Times (24th January 2014)
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