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Bank Transaction Tax Proposal – Why It is Not Practical
THE ARTHAKRANTI PROPOSAL vs. IDEAz4INDIA PROPOSAL
| Arthakranti Pratishthan – BTT | IDEAz – Consumption Tax / Goods and Services Tax (GST) |
| Remove all taxes | IDEAz too agrees to remove all direct taxes. Only GST as indirect taxes should exist. The Income Tax Department can go. In any case out of the about 3% Tax payers in this Country, over 2% are Government employees and the costs of the Income Tax Department, at market value, including litigation expenses and administration and pension costs are more than the tax collected from the balance one percent. Thus the IT department is net revenue negative and hence, should be done away with. Once IT is removed, the concept of ‘Black Money’ is no longer valid. Trust the Citizens, even as you verify their statements/accounts.
If salaries and dividends are treated as service and taxed accordingly in the hands of the employee or of the employer/business/ Company, and all depreciation and other exemptions done away with perhaps even corporate income tax can be done away with under the GST regime. |
| Replace with a Bank Transaction Tax (BTT) to collect one to two percent of all Bank transactions above Rs 2000/- | Not recommended as it will only make the Banks into new PSU’s / Bureaucracy and will encourage a parallel barter economy, unless a way is found to make such BTT correspond to loss of value in the currency each month. (See – Money and Financial Boom and Bust Cycles – an inevitable outcome?) which may not be practical in the short term. |
| Recall and scrap all 500 / 1000 / 2000 Rupee Notes from circulation | IDEAz agrees, but by Demonetisation. After ensuring enough 200/100/50/20/10 rupees notes will be made available. Just recall will not do. Only removing from circulation but not demonetizing the higher currency notes does not address the huge amount of counterfeit currency already in circulation within the country. Demonetization will remove much of the existing counterfeit currency from circulation (See ‘Black money & counterfeit currency’).
This also, addresses the issue of terror funding and counterfeit currency which is an act of war by our neighboring Country on us and of human trafficking etc. This will also, drastically reduce Corruption / ‘black’ and unaccounted money, as storing and moving large amounts of currency will no longer be practical. |
| Limiting cash transactions upto Rs.2000/- only | Demonetization and ensuring everyone has a bank account and by paying all subsidies only directly into such accounts will automatically reduce cash transactions. Any good system should involve as little regulation as possible, as discretionary power leads to misuse and corruption. The existing limit of Rs 20,000/- cash payments and Rs 50,000/- cash withdrawals can be reduced to Rs 2,000/- and Rs 20,000/- respectively. |
The Artha Kranti proposal at first glance appears quite revolutionary and seemingly plausible, but a proper understanding of the issue shows that it is only an attempt to reinvent the wheel. It does not address the key issues of a proper financial system that is in consonance with Nature’s laws and that which deals with interest, savings, unearned income, dividends, uniformly. The BTT system will not be as simple as it is projected to be, it calls for too much regulation and controls and too much discretion from those who do regulate / control. Something that good governance should seek to avoid. BTT is even discriminatory (See – Annexure below).