WHAT PRICE HONESTY?

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LAST WEEK, AN ELDERLY COUPLE CAME TO SAY GOODBYE. After decades of life here, they were relocating to Bangalore, finding Delhi summers and winters unbearable. Since their retirement some fifteen years ago, they had been residing in a DDA flat at Saket. Their life was honest, uncomplicated and modest. Two sons in the US completed the family — affluent, very concerned about their parent’s welfare, remoteness notwithstanding.

I asked the old couple whether selling the flat had been easy. They told me that they had to wait six months, as all the prospective tenants wanted the transaction primarily in black. This notwithstanding a Supreme Court ruling making it compulsory for the buyer of a property to obtain ‘No Objection’ from the Income Tax Department.
“But what on earth would I do with black money” wailed the old lady. “Our wants are so few”, she went on, “how can we keep Iakhs and lakhs in the house? We were offered Rs 70 lakh if we agreed to take Rs 30 lakh in white and the rest in black. By God’s grace, only last month we found a young couple who took a bank loan and paid Rs 50 lakh, all in white. Not only have we lost Rs 20 lakh, but what is worse”, said she “the income tax authorities will now start combing our tax returns because nobody in our colony has ever sold a house for more than Rs 30 lakh! By showing a Rs 50-lakh-sale, we have made enemies of our old neighbours and bought, God only knows how many more problems.”

This is not an isolated story. These are dilemmas that conftont all honest citizens — to insist on being aboveboard and lose big money; or accept it under the table and worry forever about hiding the cash, all the while fearing the taxman’s knock.
Of course there are thousands more who simply thrive on ‘Number 2 businesses. Shops readily accept cash — no matter how huge the amount might be. I happened to visit one of the largest jewellery shops in Connaught Place. My daughter had pierced her nose and wanted to flaunt a diamond. Escorted upstairs to the diamond section, I was shown a few specimens, with an air of indifference. The chic sales girl’s eyes were fixed on the sofa next to me where sat two women and a man caressing and commenting on an array of diamond ‘sets’. For each item the price was displayed on the calculator; and the items once selected, the transaction was reduced into a scrap of paper, literally a tattered corner torn from a note book.

When Black money talks, no receipts are sought or given. It is simply a matter of ‘faith’. The dude accompanying the two women shoved his hand inside a large plastic bag and rummaged through thick wads of notes. When the money fell short, he plunged his hand into another bag and transferred something solid from one bag to the other. He thrust the bag into the shop girl’s hand who held it like soiled linen as she sashayed to the proprietor’s desk. It was clear that something as costly as a house had been purchased. Memories of my old friends from Saket heightened the irony of the situation. What really bothered me was that both the situations were extremes in a sense, but the scales are increasingly tilting towards the black routes when it comes to property, weddings and jewellery where the absorption rate of black money is at its peak.
Countless commissions and task forces have been established to clean up the mess that surrounds us. They produce tomes which are read only by default. Why do we have only guesstimates that black money accounts for anything ranging from ten per cent to forty per cent of the GDP? After all, there is a greater responsibility to protect honest citizens and to encourage them to observe the law than to conjure up amnesty schemes which pamper the dishonest. Even if an honest taxpayer is not harassed, as is claimed, is that enough? Is he to assume that the rule of law is not to apply to those who break the law? When all transactions above specified limits have to be made strictly through banking channels, why is it not possible to ensure compliance? If the banking machinery is too rudimentary, a beginning could at least be made with the eight biggest cities.

In Belgium and France, personal privileges like driving and road licences can be withdrawn from those found fiddling with black money or resorting to tax evasion. What if builders, hotels, restaurants and jewelers shops (to start with) were told that all their business would have to be conducted with plastic money? Would they close business? Surely not.
Suppose involvement in Number 2 transactions ran the automatic risk of losing the right to hold elected office or company directorships, one wonders how many high and mighty persona would continue dabbling in ‘kala dhanda’. Similarly, defaulters would also be terrffied of losing an arms licence, which for travelling businessmen is an all-important security and status symbol. For that matter if, “under investigation for tax evasion” were to be stamped onto an offender’s passport, it would be far more effective than coughing up the heaviest of fines.

There is a tipping point when things have to change. It may not happen for many years; but if the opportunity cost of monkeying with black money outweighs the benefits, things could change much sooner. Today, in the highest circles (defined by money power), tax evasion is not considered a crime. It is merely a ‘miscalculation of tax’ — like an exalted traffic offence. There is therefore a need to introduce the stigma of criminality to make the spectre of ‘Number 2’ socially taboo.

While other countries publish the number of tax evasion cases that went to the courts, the number of convictions, the prison sentences imposed, the fines payable, the investigations finalised and the cases handed over to specialised agencies dealing with ftaud and suppression of identity, no such information adorns the sanitised web sites of our tax authorities. The short point is— criminalize tax evasion and stop pampering the dishonest.

Let us at least, display the names of the 75,000 odd (pun intended) assessees (city wise) who file an annual personal IT return of more than Rs 10 lakhs. This should shame people into paying their taxes once their friends (and enemies) do not see their names on the list. It is all about changing social mores and it can be done. A five-man-group comprising income tax and sales tax officers, those in charge of stamp duty and property tax, plus the passport office, if they come together, will find ingenious ways to make the guilty shudder and pay up.
There is enough collateral evidence available with all these authorities, if only they worked together. They only need a directive. Is that asking for too much? The tipping point has to come — for the sake of the country’s development, the sooner the better.

One thought on “WHAT PRICE HONESTY?

    office supplies said:
    May 17, 2010 at 8:02 AM

    office supplies…

    I wish I had read this article last month, it would have made my job easier…

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