Not all the efforts at North Block, whether by ministers, economists or advisers, will help to fill up the national treasury. One reason is that the finance ministry is prisoner of a mindset which refuses to step out of the old pit of income tax, excise and import duties. These are taxes innovated by European rulers for the European people to pay. Their system takes no account of the Indian psyche. To pay tax has seldom been recognised as a duty by us Indians. Nor have our leaders taken the trouble to educate the people. That unless the public treasuries are well endowed, not only civic life suffers but the country’s civilisation would be damaged by their profligate spending. Governments have led people to believe that to pay tax is to contribute to this waste. With these factors in mind, Anil Bokil, an entrepreneur in engineering at Pune, has suggested an unusual scheme of taxation. According to him, let there be only one tax and one tax alone. Call it a bank transaction tax of two per cent. All banks should deduct 2 per cent from all payments or credits that they handle on behalf of their customers. Everyone going to receive payment, whether against a bill, a debt, a salary, should be prepared for a 2 per cent deduction from the account receivable. In compensation, he would have to pay no other tax whatsoever. True, prime facie, bank transactions would exclude black economy which is estimated to be 40 per cent of the whole. But with the abolition of all other taxes the incentive to remain black would expire. The biggest currency note should be Rs 50. All other denominations of Rs 100 upwards should be demonetised. This would be to compel all those who make payment in cash to carry unmanageably larger bags full of currency. It is estimated that the volume of bank transactions is so large that it can help to raise more than sufficient revenue for not only the government of India but also states as well as local bodies. As the black economy comes into white, the revenue receipts would boom. If the current revenues of the centre, the states and the local bodies is Rs 6 lakh crore annually, the transaction tax should be able to garner, say, Rs 8 lakh crore. As the banking sector expands in the rural areas, the tax would earn more and more. In this scheme, 0.7 per cent of the total 2 per cent should be earmarked for the Centre, 0.6 for the states, 0.35 for local bodies and 0.35 for the transacting banks. However, the suggestion is likely to provoke a great deal of scepticism. There is also likely to be resistance from all the employees of the Central Boards of Taxes who would face voluntary retirement.
