Apparently the Government can Bribe

All of us have heard about police informers. I do not know whether these people can be considered to be "employed" by the police in the usual sense of the term. Apparently the income tax department also depends on informants to unearth information to conduct raids. Now this article says that some informants are disgruntled people. It clearly mentions that the funds used are secret and the IT department has to part with money to get information. Now the secrecy is justified. If I rat out a powerful real estate developer for tax evasion I do not want him to know that it was I who exposed him. 

However to my mind this entire practice seems suspiciously close to bribery. So is it ok if the government bribes its own citizens for a "good" cause? The irony is that these bribes are used for unearthing black money! So if these funds are secret, what are they, black or white? I am not saying what the government is doing is wrong. It is being pragmatic. However I just want to point out the irony. Also, the government keeps spouting Mahatma Gandhi's name often. I wonder what his take would have been on this classic case of the ends justifying the means.

This is entirely(?) unrelated, but what is Robert Vadra's name doing on the list of people exempt from frisking at airports? Does anyone know the logic?

India's Cash Economy?

There was a quote in a recent edition of Business Today by Ajay Banga, Head of Mastercard in India. He says that Indians prefer dealing in cash. They do not like electronic money as it can mean monitoring by the IT people. Now, I think I have said this before also, but I will say it again. Probably everyone who pays tax grumbles about it. Add to that the misuse of the public's money and one's blood really boils. 

Mayawati's statue-building spree immediately comes to mind. The CPM government in West Bengal has renamed the New Town area as Jyoti Basu Nagar. It is probably set to install a number of statues of him also. I would be happier if the government instead spent the money on hiring more people for the metro's construction and then named the metro after Jyoti Basu (I know, construction happens through tenders, blah blah, but I can hope). Also, every time I pay sales tax I am adding to the state government's kitty, so I should have a say in state finances also!

Today, I don't think there is a really effective way of registering protesting against misuse of public funds. One can always approach the courts, but what the outcome would be is something that is highly questionable. But sigh, what can be done?

Tax Havens

India and Switzerland are negotiating a treaty whereby India can gain some access to details of the money deposited by its citizens in Swiss accounts. The question is, does the government have similar treaties in place or at least lined up with other countries also? Cayman Islands, Luxembourg and Lichtenstein are three countries I, a layman, can think of off the top of my head which can be alternatives to Switzerland. Those who stash the money away must surely be more aware than I am.So unless there are treaties with all these nations I cannot understand how the Swiss treaty can be affective. 

Furthermore the treaty has to be approved by Parliament and when this will happen is a big question mark. Opposition parties have not been letting the Parliament function properly and surely there must be many politicians among those who have money abroad illegally. So the more the treaty's ratification is delayed the more time these people will have to look for alternative locations.

Another point of interest is the tax situation in our country. I do not have the exact figures but apparently about 1% or so of our population pays income tax. Somehow this seems unfair especially when we hear about various irregularities in spending the taxpayers' money. Agricultural income is not taxed at all. This can be brought into the tax ambit. Rates can be lowered and simultaneously penalties for evasion should be made very high to deter. In US courts defendants are occasionally slapped with very high damages. I believe the idea is to deter them from repeating the mistake/offence (the success of this is another question altogether). This is the concept I am talking about. The evasion penalties must be so high that people should think twice before planning tax evasion. However as I have said, the rates should also be brought down simultaneously, thus encouraging more people to honestly pay their taxes.