Black Money2003

7/29/2019 Black Money2003

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RUHI SARANGAL5717


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BLACK MONEY Income, as from illegal activities, that is not

reported to the government for tax purposes.

generated by any number of criminal acts,

including drug dealing, corruption, accounting

and other types of fraud, and tax evasion.


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It is also a cause ofbig loss in the tax-revenues for the

government.

black economy,

unaccountedeconomy, illegaleconomy,

subterranean


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involved is as much as aboutRs4O, OOO crores.

constitutes around 20 per centof the gross domestic productof the economy

money involved in black/secrettransactions or used in parallel

economy.


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Impact of Black Money

It leads to the misdirection of preciousnational resources.

It has enormously worsened theincome-distribution.

big handicap in making a correctanalysis and formulation of rightpolicies for it.


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Black money has

corrupted ourpolitical system in amost viciousmanner.

money results intransfer of fundsfrom India to foreigncountries throughclandestine

channels.


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It is, therefore, no exaggeration to say that black

money is like a cancerous growth in the

countrys economy which, if not checked in time,is sure to lead to its ruination.


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Effects of black money onIndian Economy

Affects publicrevenues,

Degenerates the

investable surplus,Delimits the national

productivity,

Drains the balance ofpayments,

Distorts equity and

equality concepts


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What are Tax Havens

Small countries like Switzerland,Angola, Bermuda, etc that act as placesof registration for overseas non-resident companies.

They have zero or very low income tax.

They ask no questions on the origins ofthe money coming into their banks.


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They keep all banking records secretand cooperate very little with othercountries.

They have no contribution to the world,except as points on the world-map where dirty money is kept safely.

Avg. size of 34 such point-countries =17 kms by 17 kms.


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Role of Switzerland

Swiss ambassador, Switzerland was accused ofgiving shelter to black money and there has been alot of inflow of such wealth from India. [NDTVProfit 15-03-2008]

Switzerland has 1/3rd global private funds.

Switzerland must follow Germanys model which is

willing to give the details of all Indian names in theLGT Bank secret records.

Switzerland is not cooperating fully. It is reluctant togive full access to its banking records.


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G20 stance

At the London G20 summit on 2 April2009, G20 countries agreed to define ablacklist for tax havens.

Germany & France have threatened tax-havens like Switzerlandwith BLACKLISTING them, if they dont

co-operate.

Switzerland is under serious pressureto risk black listing or cooperating.


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At first UK did not support this, butpublic criticism forced UK PM Gordon

Brown to change tracks & issue astatement, This is the start of the end.The era of banking secrecy is over.

Unfortunately, India has kept quiet.


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PRESSURE TO BLACKLISTSWITZERLAND

The US IRS (Internal Revenue Service)fines Switzerlands biggest bank UBSto giverecords of 300 top tax evaders.

UBS had to pay a fine of $800 million(Rs 4,000 crores).

US has asked for 52,000 more suchaccount details. Germany & Francethreaten to blacklist Switzerland. India

must act similarly.


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Swiss laws protect the guilty

Switzerland is reluctant to amend its laws.

The Swiss Federal Act on international mutualassistance in criminal matters (1983) and

other Swiss laws permit access to bankrecords only if proved that the money stored isused for criminal activities.


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Richard Murphy, famous British anti-tax havenconsultant, The information exchange

agreements dont really make it practical to getinformation unless you know the name and a/cnumber of the person

India must join other countries and buildpressure on Switzerland.


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The great Indian silence

Germany & France threaten blacklistingof Switzerland. India keeps quiet.

Germany and France take the issue of

secret banks and tax havens in the G20preparatory meeting at Berlin InFebruary 2009. India keeps quiet.

These two nations and supported by UKand the US raise the voice against secretbanks and tax havens in London in April2009, India keeps quiet.


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govt. offers to open secret names ofthe account holders in LGT Bank ofLiechtenstein. India keeps quiet.

Why India has not effectively worked toget the names of several Indians

believed to be in the secret records


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India must act

Develop national will & agenda against blackmoney in foreign banks.

Get immigration details of the 25,000frequent travellers to tax havens.

Upgrade Financial Action Task Force (FATF)membership to full.

Make specific anti-tax haven laws. Publicize entire economic history of

overseas account holders.


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Demand LGT BanK of Liechtenstein'ssecret records

Ensure India friendly global anti-secret

banking rulesAppoint a special emissary to Germany &

Switzerland.

Develop a proper Institutionalinfrastructure to fight the flight-of-capital


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Black Money2003

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