Why not do away with personal income tax -Governance Now

Why not do away with personal income tax

Taxes can be replaced with Bank Transaction Tax

GN Bureau | December 8, 2017

#ArthaKranti Pratishthan #income tax #Bank Transaction Tax #budget

The pre-budget days are here again and there cannot be a better time than this to once again seek an end to personal income tax.

Ending taxes on personal income will be a big relief to the senior citizens and the salaried people. There are alternatives to raise revenue and those need to be carefully explored. The government can also look at hiking indirect taxes to mop up the shortfall.

ArthaKranti Pratishthan, a Pune based NGO, which is credited with recommending demonetisation to weed out black money, has repeatedly demanded complete abolition of taxes, direct and indirect by the central or state governments and also the local bodies.

Read: Debunking ersatz tax theories

It suggested that the taxes be replaced with Bank Transaction Tax (BTT). The idea was that inward bank transaction would attract a levy and it would be a single point tax deducted at source.

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%), said ArthaKranti.

Assocham has recommended that tax exemption limits for senior citizens and salaried employees should be also raised substantially for a demand push to the economy.

Assocham president Sandeep Jajodia said in his presentation before finance minister Arun Jaitley that senior citizens and salaried employees are particularly affected by rising prices of essential commodities and deserve relief. This would not only give a push to the consumer demand but also promote personal savings.

He added that corporate tax should be reduced to 25% as committed by the government earlier, to encourage investment by domestic and foreign companies.

Niti Aayog too has recommended keeping tax levels moderate in order to tackle black money.

“Structural changes to reduce flows of black money will involve keeping tax levels moderate and tax administration simple and transparent, and reforms in real estate transactions, including seeding of Aadhar and moderate stamp duties,” said Niti Aayog’s Three Year Action Agenda .

It said that the government must frontally address the problem of corruption among tax officials. Cases of corruption among tax officials must be prosecuted and disposed swiftly since without instilling honesty among officials in this area we cannot curb the generation of black money.

In 1997-98, P Chidambaram while delivering the budget speech said: “I believe that a good tax policy should aim at moderate rates, a wider tax base, simpler procedural rules and securing greater compliance.”

The 1997-98 budget was described as a dream budget as it presented a road map for economic reforms in India and included lowering income tax rates, removal of the surcharge on corporate taxes, and reduced corporate tax rates.

To rationalize taxation in India, the government had set up a high powered committee in August 1991, under the chairmanship of Raja J. Chellaiah. The Chellaiah committee had made recommendations for a comprehensive reform of the system of central taxes.

Comments

Other News

`Focus on infra, reforms, digital connectivity has created strong foundation for growth`

In a step towards the operationalisation of the Bharat Audyogik Vikas Yojana (BHAVYA), union minister of commerce & industry Piyush Goyal launched the BHAVYA Portal on Monday in New Delhi. Addressing the gathering, Goyal said that the BHAVYA scheme will adopt a competit

Govt, RBI announce major reforms to attract FPI

The finance ministry on Friday announced a series of measures aimed at enhancing the ease of investment for individual Persons Resident Outside India (PROIs) and Foreign Portfolio Investors (FPIs), and to attract stable long-term foreign capital flows. Building on the recent in

Lessons in climate adaption from world’s largest inhabited river island

Majuli Island, perched between the Brahmaputra River to the south and east, the Subansiri River to the west, and a branch of the Brahmaputra to the north, has been severely affected by recurrent flooding and intense riverbank erosion. Despite its global importance in acquiring UNESCO tentative status for

Careless whispers and the impossible trinity

Time can never mend, the careless whispers of … As the RBI marches ahead, for the upcoming monetary policy meeting this June, whispers from the corridors echo around several policy options to defend the rupee – by deploying forex reserves, raising in

Bullet Train Project: Third mountain tunnel breakthrough achieved

A major engineering milestone has been achieved in the Mumbai–Ahmedabad Bullet Train Project with the successful breakthrough of the third mountain tunnel (MT-07) at Ambesari village in Dahanu Taluka of Palghar district, Maharashtra. With this achievement, three mountain

Supreme Court gets five new judges

Five new judges were appointed to the Supreme Court of India on Monday. "Vide Notifications of even number dated 01.06.2026, in exercise of the powers conferred by clause (2) of Article 124 of the Constitution of India, the Hon’ble President of India is pleased to appoint (i) Shri