New Delhi, May 27: The Congress-led alliance today said in the common minimum programme that special schemes would be launched to unearth black money and assets.
No surprise that — P. Chidambaram, PC for short, is in the finance minister’s chair, and the first time he held the post in the United Front government he had introduced such a scheme.
If that’s what the programme holds for who do not pay their taxes, for those that do, it promises stable rates. There is a proposal for charging a cess on central taxes to fund education, which could affect income tax rates, though.
Estimates of black money have put the amount at 40 per cent of the gross domestic product, or Rs 10 lakh crore. At a tax rate of 30 per cent, the government is then missing out on some Rs 3 lakh crore in revenue, which is three times the current fiscal deficit — the gap between expenditure and revenue.
Finance ministry officials said that if a new black money amnesty scheme was launched in the budget, it could be expected to legitimise rights to wealth and income from undeclared assets that are not tainted by crime money.
“Amnesty from future prosecution and probes will be an inherent part of such a move,” the officials said.
The scheme may not necessarily be limited to individuals but could be extended to small businesses or even large companies. The last such scheme had been offered to individuals as well as companies.
Analysts, however, point out that earlier schemes to tap black money have not been great successes. Till 1997, when Chidambaram’s scheme was unveiled, five amnesty schemes yielded no more than Rs 780 crore.
The 1997 voluntary disclosure of income scheme garnered Rs 10,050 crore. It was estimated to have tapped about Rs 33,000 crore or less than 4 per cent of the total black money in the economy.
“People do not believe in coming clean... they feel it does not pay in the long run,” said chartered accountant Sudatta Sen, explaining why tax dodgers do not take advantage of amnesty schemes in the way the government expects them to.
The last scheme’s declarations were supposed to have been sealed and lodged safely so that no tax official could access them. But many claim that they were later opened by officials and the declarants often harassed.