Conclusion

The Artha Kranti proposal for a Bank Transaction Tax lacks completeness for execution. A proper Consumption Tax / GST which is simple and self enforcing is equitable and the best way to tax.

Annexure

The Artha Kranti proposal says that there should not be any income tax; instead every bank transaction should be taxed.

1. This means that a genuine temporary loan that you give to a friend or a relative would be taxed and that too twice.
2. This means that when you return some goods and get a refund you will pay tax twice without the purchase actually having happened.
3. This leaves a loop hole for the barter system. Simple example is that a small goods transporter would take credits from a store selling groceries rather than taking payment to try and save on transaction tax.
4. The tax paid on each transaction does not take into consideration that all transactions are not the same. If the transaction is to meet the requirement of a low margin deal then the tax will be too much in comparison to the tax charged on a similar value transaction but for a high margin deal.

JAI BHARAT! – JAI HIND!

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