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Updated: January 8, 2014 02:06 IST

Proposal to abolish many taxes before BJP Parliamentary Board

Special Correspondent
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Pune-based outfit suggests tax reforms to BJP leader Gadkari

One of the several tax reform proposals before the BJP Parliamentary Board recommends abolition of the more than 30 local, State and Central level taxes levied at present. The proposal recommends that from the present tax system only import duties should be retained. The proposal received by former BJP president Nitin Gadkari from a Pune-based tax research outfit recommends replacing the present tax system with a single 2 per cent levy per receipt in bank accounts.

The proponent of the tax reform, Arthakranti, made a presentation to journalists on it at Mr. Gadkari’s residence here on Tuesday. He heads a committee that is preparing a vision document for the party on reforms in five areas — police, administration, judiciary, taxation and education. “This innovative tax reform proposal is aimed at reducing corruption and eliminating the cost of compliance for tax payers,” a highly-placed source told reporters at the meeting facilitated by Mr. Gadkari.

“A single income tax raid/search/seizure results in a loss of at least Rs. 15 crore to the taxpayer being scrutinised.” The proposed tax can be collected through the banking channel rather than tax collection authorities.

“The proposal is to not tax consumption or income as is the case at present, but tax the velocity of money,” said Arthakranti’s Anil Bokil. “Even in the U.S., a senator from Hawaii has introduced a private member bill on a similar concept.”

The tax reform proposal will not lead to a loss of revenue for the government, the source said, adding that it will plug tax evasion and avoidance. Mr. Bokil said that, Arthakranti’s calculations show that the 2 per cent tax will yield Rs. 40,00,000 crore. Eminent economist and former secretary-general Ficci Rajiv Kumar, also present at the meeting contested the calculation. According to Mr. Kumar, at 2 per cent the proposed new tax will yield about Rs 14, 00,000 crore. In 2012-13, the Centre’s total tax revenue (Revised Estimates) were Rs 10,38,037 crore.

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this proposal is not feasible in present conditions because it is against social justice as it doesn't differentiate between tax payers and non tax payers.

from:  A.k.prince
Posted on: Jan 8, 2014 at 09:45 IST

The proposal is in a way good as this will the most cost effective way of collecting taxes. This is also simple and easy to understand for both the tax payers and tax administers. This will eliminate unwanted disputes , corruption and prolonged litigation, which will totally eliminate tax consultants and practitioners and tax lawyers and the tax tribunals. They will be rendered jobless and we can throw the existing 400 page tax act into dustbin. The existing tax administers can be deployed elsewhere for social work and can get slowly phased out. Business will breath easy as they don't have to worry on taxes. However there is only one big problem in this. This 2%transaction tax will also mean marginal entities and loss making entities will also pay tax. This results in lack of equity in the tax system. While simplicity and equity or one of the main cannons of taxation, this system satisfy only one. Hence marginal and loss making entities have to adequately addressed.

from:  K L Venkat
Posted on: Jan 8, 2014 at 08:47 IST

At last there is some thought for tax reforms. We are heavily taxed at present, in so many forms, sometimes end up with double taxation etc. For instance, all kinds of service taxes at 12.5 % is totally unacceptable. It is need of the hour that we reduce tax and make it more friendly so that people will not be evasive. This will definitely increase the treasury rather than decrease. It will be more meaningful, better and uniformly distributed.

from:  parvati shastri
Posted on: Jan 8, 2014 at 08:16 IST

We have a such elaborate tax collection system employing huge number of
people and highly paid iT commisioners etc etc;all these guys will
become jobless; there will be huge Opposition for this from this
Bureaucracy!!!

from:  sethu
Posted on: Jan 8, 2014 at 07:48 IST

Unless the many taxes are abolished, tax evasion will flourish, black money will continue to be accumulated. The proposals of the BJP appear to be pragmatic and burden free.

from:  jayenness
Posted on: Jan 8, 2014 at 06:35 IST

The BJP proposal for 2% levy on all receipts in the bank appear to be
too good for the elimination of all other taxes at local, state and
center. But the spurt in underground economy of cash transactions can be
anticipated, if all receipts in the bank are levied at 2%. Even now the
underground economy is thriving in all parts of the country especially
in real estate transactions. The government has to stop the cash
transactions in real estate business before the 2% levy on bank receipts
are implemented. Is the levy applicable for debit card deposits?

from:  Davis K. Thanjan
Posted on: Jan 8, 2014 at 05:16 IST
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