Reason 038; outrage

Double tax avoidance treaties are extremely complicated things,but one of the most simultaneously fragile and yet enduring forms of international agreement. The idea is that people should not wind up paying taxes in two countries for the same transaction. They are a complex web of bilateral agreements,but they are crucial to the globalised world in which we operate today,allowing individuals to get the best international price for their products,and the expansion of companies across national borders. And if the world-spanning web of tax treaties is expansive enough,it has the additional benefit of reducing peoples abilities to avoid,or outright evade,legitimate taxation.

It is beyond dispute that Indias exchequer has suffered from it being apparently easy to take money out of this country with little fear of repercussions. We are not sure exactly how much,though,given that knowing the size of invisible things is not easy. Part of the problem is that Indias web of treaties has too many holes in it. One big hole,for example,is Switzerland; the original treaty between India and Switzerland didnt allow for inquiries about banking transactions. Now,at least,specifically-targeted inquiries about possible evasion,are supposed to be answered. The treatys ratification by the Swiss parliament is at a delicate stage. Its unfortunate,therefore,that at this time a two-judge bench of the Supreme Court,while hearing

proceedings in public interest litigation filed by lawyer-politician Ram Jethmalani,chose to question the government closely about which names it did or did not have,and why it would or would not reveal them publicly.

The judges were understandably moved to anger by the scale of the problem. In response to the governments arguments that,while it was working to move towards prosecuting tax offenders,it was in the meantime bound by confidentiality clauses in various tax treaties,they said,We are talking about a mind-boggling crime; we are not on the niceties of various treaties. Yet it is precisely those niceties that are

central to Indias larger,enduring quest to minimise tax evasion. Now,the fear that India will abandon confidentiality under political or judicial pressure whenever convenient will certainly make it harder for the Centre to corral low-tax jurisdictions into signing treaties. The SC is seized of the importance of this issue,of which we can all be glad. It surely also realises that their details matter. And that in the service of this cause,it should rise above populist anger.