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THE “BLACK MONEY” LARGELY IT EXISTS IN ALL TAXED ECONOMIES EXCEPT “NO TAX COUNTRIES”

 
 
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THE “BLACK MONEY” LARGELY IT EXISTS IN ALL TAXED ECONOMIES EXCEPT “NO TAX COUNTRIES”
by System Administrator - Saturday, 2 April 2016, 1:07 AM
 

By : M.S.Yatnatti: Editor and Video Journalist Bangalore : According to reports "The cash assets on which taxes have not been paid is termed BLACK MONEY .Largely it exists in all taxed economies except NO TAX COUNTRIES like UAE ".Economy does not recognize color of money but govt does. As long there are taxes, there is scope for BLACK MONEY. It is not possible for taxing countries to do away with BLACK MONEY. However, dilutions are easily possible. Black money and corruption have in every country. So, a model cannot eradicate these problems from the society. If the government become more conscious and people become honest then they can be reduced. Corruption is nothing new in any country and any society. Every human being is opportunistic in one way or other. If a student gets chance to copy for good marks he will do.Everybody wants quick benefits with less hard-work, that's why when opportunity arises nobody thinks about welfare of others. So the only way to contain it is severe laws and strict enforcement. but then the question arises what if the law-makers are corrupt. That's exactly what happens in poor and least developed countries the most.Corruption may also be existing in developed countries, but it won't be affecting the day-to-day life of millions of people. So that's why corruption is more a topic of behavioral economics. Corruption and black money can be modeled but i don't think some empirical or mathematical model can wipe out these problems from the country until or unless the people+politicians+bureaucrats are fully determined to do so. For me only one unique to eradicate the corruption in the world is firm belief in God and punishment one will get Hereafter for disobeying Our Lord. otherwise there is no model or theory which will guarantee that corruption will be eradicated.

First things first - Black Money already exists in India, and the volume of black money is so high that India has a parallel economy running which does not need a bank, or a capital market to let this money circulate. If additional Black Money comes, some of it will continue to stay in that form only. A part of the black money will sure get converted into White money.I believe you are more interested in knowing the impacts of Black Money in your day to day life. Black Money leads to an increased prices of essential goods. It also gives a boost to real-estate. The demand for Gold & Diamond  jewellery kick-in.However, not all is bad with black money, if at all people holding it start spending at the right channels. Black money will automatically become accountable and start helping the Indian economy, if people holding it start using it at those outlets which come under the Tax structure, and they pay their taxes religiously.The problem with big-ticket items is that they have a KYC procedure and hence no one holding Black Money spends in those avenues, or does it with a tact (which yet again doesn't let money become taxable, like real-estate). So, such people at best could start spending their money in Branded stores (which have to comply with Government Rules and mostly pay taxes pretty religiously).Also, one must keep in mind that entire Indian grass-root workers survive on unaccounted money, which is as good as Black Money. If they can be provided an avenue to deposit their money on a daily basis, a lot of Black Money would find its way into mainstream economy. [A very small, yet effctive, start has been made by the Government of India through their Jan Dhan scheme. Hope it will contain a large part of Black Money in the decades to come.]

Total computerization and ERP adoption and online government is first step towards making a Corruption-Free Government and Governance .Reportedly Kala Dhan is created by the people who do not pay tax for their earnings and eventually it take birth in India and grow in India . So question of bringing it from outside does not arise and it is alleged that balk money exists in all part of the world. .In India, Black money refers to funds earned on the black market, on which income and other taxes have not been paid. The total amount of black money created in corruption deals is unlimited and quantum is unknown. Effective and credible deterrence is necessary in combination with reforms, transparency, simple processes, elimination of bureaucracy and discretionary regulations. Credible deterrence needs to be cost effective, claims the report. Such deterrence to black money can be achieved by information technology (integration of databases), integration of systems and compliance departments of the Indian government, direct tax administration, adding data mining capabilities, and improving prosecution processes. Time is ripe for political parties taking sincere approach on such issues. The irony is that the politicians and their crony capitalists have the bulk of the black money which they liberally use during the elections when the Election Commission and other bodies remain helpless. The elections in the country have down-graded to battle of money-muscle power.

Reportedly the money that is siphoned off in scams is no doubt large but the money made in petty corruption is not smaller though they are not stashed abroad. The money made through corruption starting from driving licence, MNREGS, PDS system, subsidies, public procurement, bribing lower staff to push files, paying money to taxmen for getting their returns scrutinized and securing genuine refunds, real estate registration, bribing the cops for traffic and other violations and so on hit hard the common man most and stunts economic development. The parallel economy, which could be as much as 50 per cent of GDP contributes greatly to inflation, delay in decision making and at times stalls development activities because some vested groups are not able to make money.

Black money exists all over the world, most rich people had deposited money in tax haven countries.Instaed of looking into black money which exists in other countries why not look into local Indian black money market. Every body knows about the level of money being deployed in every elections and still none of the central and state government take any action about it. This money basically is given to local politicians for getting their work done. So ultimate goal is to stop corruption and it is at the hands of higher authorities who divert attention by speaking at large about bringing black money to India.There was a poll promise, "Brining black money to India and giving it to every Individual", Why do you want to bring black money and give it to every individual in India? Stop corruption in every part of India and automatically there will be progress in all front. The notion that black money goes out of India to never come back is a wrong one. Most of the black money that goes out of India comes back. It is usually brought back to India through other channels like hawala, PNs,GDRs, remittances etc.Bringing back black money is a falsehood that politicians have propagated, the media has promoted and we as people have latched on toJust think of it in a practical manner. Keeping lots of money stashed in bank accounts is not rational for the owner of black money. He/She would be better off investing it in assets like real estate, equity markets or in elections.

Reportedly Corruption in India is a major issue that adversely affects its economy. A study conducted by Transparency International in year 2005 found that more than 62% of Indians had firsthand experience of paying bribes or influence peddling to get jobs done in public offices successfully.In its study conducted in year 2008, Transparency International reports about 40% of Indians had firsthand experience of paying bribes or using a contact to get a job done in public office.In 2015, India was ranked 76th out of 175 countries in Transparency International's Corruption Perceptions Index, compared to its neighbors Bhutan (30th), Bangladesh (145th), Myanmar (156th), China (100th), Nepal (126th), Pakistan (126th) and Sri Lanka (85th). This is the second least corruption rank for India in the whole of South Asia.In 2013, India was ranked 94th out of 175 countries.In 2016, India was ranked 76th out of 168 countries in Transparency International's Corruption Perceptions Index