Party proposes abolition of all direct and indirect taxes for individuals as well as corporates in favour of a nominal transaction tax
New Delhi : In a radical proposal, a hitherto unknown research group has suggested abolition of all direct and indirect taxes for individuals as well as corporate sector in favour of a nominal transaction tax only for receipts, which is being studied by main opposition party BJP.
While some BJP leaders have already talked about such a proposal, its main proponent, Pune-based Arthkranti Pratisthan, on Tuesday claimed that this system would actually help grow India’s tax revenues nearly three times from about Rs 14 lakh crore currently to over Rs 40 lakh crore.
A senior BJP leader, however, said that it was one of the many proposals currently on table for preparation of the party’s Vision-2025 document, and a final decision would be taken only after taking into accounts suggestions from various quarters on Arthkranti’s proposals.
The party expects to take a final decision before the general elections, he said. First, the party’s vision committee would take a call on this and the same would be thereafter sent to BJP’s Parliamentary Committee for final decision, the leader said, while adding that the proposals are being studied currently. The proposal has been submitted to BJP’s Vision 2025 committee, which is headed by former party president Nitin Gadkari. This committee is working on reforms in five broad categories – judiciary, education, police, administration and tax.
While making presentation before journalists on their proposals, representatives of Arthkranti claimed that they have also made presentations before others including Arvind Kejriwal of Aam Aadmi Party, while they are also approaching IAS officers and industrialists. They also said that Arthkranti has been in touch for about five years with Baba Ramdev, who also recently talked about such radical taxation proposals.
While admitting their proposals appear ‘radical’ in nature, Arthkranti representatives said they are suggesting a corrective programme not just in taxation area, but for the entire economy. However, they could not explain the feasibility of implementing such a taxation system, especially in areas like states losing their fiscal powers and the cascading effect of a receipt-based transaction tax in manufacturing and other business sectors.
When asked whether a receipt tax at every level — starting from raw materials to sale of a product — could lead to much increased prices because of all tax payments eventually being passed on to consumers, they said they have taken into account all issues, but did not explain the model.
In a presentation running into about 100 pages, along with a research report of over 200 pages, Arthkranti also called for abolition of all high value currency notes, preferable those of Rs 100 and above, to eradicate corruption.
Citing “official data”, including from RBI, they said that Rs 1000 notes alone currently account for more than Rs four lakh crore, as against just about Rs 55 crore in late 1970s when such high value currency notes were first introduced. They also claimed that close to Rs 12 lakh crore worth transactions are currently taking place in cash, while just about Rs 7.8 lakh crore are through the banking channels.