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

Not just politics, let`s discuss policies too

Why public policy matters Most days, India`s loudest debates stop at the ballot box. We can name every major leader and recall every campaign slogan. Still, far fewer of us can explain why a widow`s pension is delayed or how a government school`s budget is actually approved. That

When algorithms decide and children die

The images have not left me, of dead and wounded children being carried in the arms of the medics and relatives to the ambulances and hospitals. On February 28, at the start of Operation Epic Fury, cruise missiles struck the Shajareh Tayyebeh school – officially named a girls’ school, in Minab,

The economics of representation: Why women in power matter

India’s democracy has grown in scale, but not quite in balance. Women today are active participants in elections, influencing outcomes in ways that were not as visible earlier. Yet their presence in legislative institutions continues to lag behind. The Nari Shakti Vandan Adhiniyam was meant to addres

India will be powerful, not aggressive: Bhaiyyaji

India is poised to emerge as a global power but will remain rooted in its civilisational ethos of non-aggression and harmony, former RSS General Secretary Suresh `Bhaiyyaji` Joshi has said. He was speaking at the launch of “Rashtrabhav,” a book by Ravindra Sathe

AI: Code, Control, Conquer

India today stands at a critical juncture in the area of artificial intelligence. While the country is among the fastest adopters of AI in the world, it remains heavily reliant on technologies developed elsewhere. This paradox, experts warn, cannot persist if India seeks technological sovereignty.

RBI pauses to assess inflation risks, policy transmission

The Reserve Bank of India (RBI) has begun the new fiscal year with a calibrated pause, keeping the repo rate unchanged at 5.25 per cent in its April Monetary Policy Committee (MPC) meeting. The decision, taken unanimously, reflects a shift from aggressive policy action to cautious observation after a signi