Swiss banks want to side step the illegal cash stash issue and have come out with the clever offer of levying a flat rate of tax on the money deposited by the Indians, which of late is estimated at $1 trillion and deliver this tax amount immediately to the government here.These banks are not in favour of exchange of information on the Indian depositors citing privacy once again.
Our government should turn down this offer and insist on providing full information on Indian account holders.Though such a tax amount would be substantial and surely enable the government in many ways to meet the resource gap in social sector spendings ,on healthcare ,education etc,yet on the grounds of justice and fair play the details are necessary to know who these offenders are, for appropriate future course of action including punitive measures apart from confiscation of unearned wealth.
Such illegal humungous stash has put enormous stress on fiscal management , capital formation and so on,for decades.With liberalisation of capital market this illegal stash is finding their way through Mauritus ,Singapore etc.to equity and other asset class creating bubbles now and again hurting the investor’s confidence level.Today Indian stock price movements are influenced more by the inflow and outflow of foreign money than the fundamentals of the company.Real estate prices too have been determined by the inflow of this illegal stash.Thus house buying is turning unaffordable to many who genuinely need a home. Commodities are not spared either.Pulse prices indicate that the speculators with the cash strength can push the price to suit their profiteering instincts.
The entire productive class has suffered the high cost economy while those in control of the Swiss stash had their field day.
It may not appear to be a crime to evade tax to the foreign authorities, for it is favorable to them to interpret so and receive the benefit of large scale illegal deposits from the citizens and leaders of corrupt regime, at a low or no cost to these Swiss Banks.
But for a country like India with large population to take care, with extremes of poverty and illiteracy staring at the face, where capital is always in short supply for the ever growing needs of infrastructure and social sector spends, illegal capital flight to secret Swiss Bank accounts create hardships to the millions for no fault of theirs in the form of higher taxes and high cost economic woes. Hence such depositors cannot be pardoned by collecting a portion of these deposits as tax and overlook other aspects of such large scale offence.
Many Indians, who have used these secret accounts to park their money, must have obtained this large scale sum not of their legitimate productive earnings, but out of grafts or siphoning from the public sector projects, state infrastructure development works or even from social sector spends of the poor, and so on.
Hence the offence is not mere a tax evasion but is mingled wilt the above type of crimes of corruption misappropriation of the state and the citizens funds. When a corrupt politician or an industrialist siphons from the government funded infra projects the consequent cost over runs, inefficiencies of project delay. Inflationary pressures fall on the honest producer & consumer class. And finally the debt servicing burden too fall on these class of citizens and the efficient sectors while those who have indulged in these large scale deposits in secret accounts their unearned wealth mostly confiscated. Punishments should be in commensuration with their mensrea. The Swiss Banks should be insisted upon to provide every detail of these cabals. How much to be taxed and how much to be punished should be left to the judgment of our Sovereign nation and it should not be left to the comfort level of foreign entities.
