Panama, Dubai, Mauritius etc. will continue to flourish as tax havens till our tax laws are made intentionally non-transparent with varied interpretations. Vodafone, and Cairn are just the beginning. You just have to look at the cases filed by tax departments in various courts. And Service Tax matters have just begun.
When you have tax rates at 33%, interest on delayed payments @18% and penalty for non disclosure @300%; all adding up to more than even your turnover, all based on the interpretation of an unfriendly tax sleuth, you will have even the honest people running for cover. At some point, their frustration will make them move their monies in safe havens too. And the way our judiciary functions only complicates matters.
We don’t trust the tax payer. The rates are high. The government makes money at the top end and the bottom end(if you still make profit). Tax terrorism is present, real and life-threatening. It hits at the existence of an enterprise and survival of an entrepreneur. I am keenly watching the move of Arvind Kejriwal led Aam Aadmi Party in reducing VAT to 5% from 12.5% on some goods to see how people respond.
However, the current taxation structure, tax jurisprudence and tax regulation machinery will either kill or drive honest people out of India. That is a given. And not every one who leaves the shores of India has done it with an ill intention or to stash money abroad. Wake up and smell the coffee please!
When I look at Panama papers, I am reminded of the Radia Tapes that Outlook published along with the audio recordings. Explosive audio recordings catching the who is who off guard.
And yet, the best government has done it this case is issuing notices to all those named in Panama papers.
What is interesting is that ICIJ collaborated not with TOI, not with HT, not with Times Now, not with the largest newspaper, but with Indian Express. That is to do with credibility. Confidential but sensitive whistle blower information flows only to credible media. And both Outlook and Indian Express fit perfectly. They publish authentic information without using or abusing the information or disclosing the source. To this day, the source of Radia tapes is a secret that will only be carried to the burial ground. Such explosive material is not means to cut favours or please political masters. It is in societal interest and may go against national interest too.
Arnab can shout from the roof top. But informed and apolitical whistle blowers will never trust him. And that is where he stands on the credibility sweepstakes. Low down the order.
After the offhand approach in which the earlier probes of Panama Paper leaks have been performed, it’s cynical to say whether the government’s assurance to identify the beneficiaries of the Indians whose names came up in the list will produce any solid outcome. If Modi led government succeeds in providing fair and quality investigation in the case, the masses can then be convinced that it is serious about bringing back the black money to India, which sums up to an astounding 30% of India’s total annual GDP. After all, Modi government has cashed in on black money row ever since it’s election campaigns.