Thursday, February 20, 2014

Corruption : Tat vam asi Part 2

This is in continuation of my first post int his topic (see this link).

Every corrupt government which demits office leaves a lot of money on the table due to its corruption. Usually this weakens the finances and forces the new government to tax the same people who are paying tax and not the people who have benefitted from the corruption.

If the in-coming government can think of opportunities for the state arising from the past corruption the same would be very big opportunities, Recently some one was mentioning that there are 2 lakh properties which have not paid taxes for last 8-9 years in a large metro, These assessees bribed the officer and got out of paying taxes.

Even if each of htese properties have to pay just Rs 10000 p. a as tax then 2 lakh properties for say 8 years amounts to Rs 1600 crores, With a 100 % penalty the could come to Rs 3200 crores. So mal-governance also provides opportunities for those coming in to rule. In addition it would also increasing the coffers by Rs 200 crores every year.

Apart from this capturing tax revenues, a clear message goes out that there is no incentive to bend break rules. Those who benefited from this will realize that in the end, evasion and corrupt practices turned to be more costly. This may also provide opportunities to trim the government workforce and/or put the fear of God into them.