Parliament on Tuesday passed the Finance Bill 2021-22 allowing whitening of undisclosed money if invested in the capital market, purchase of land and properties and establishment of new industries during the next fiscal year. Commonly known as whitening of black money, it allows untaxed money to be declared without questioning the sources of income by paying additional tax at specific rates.
We have always opposed such unethical and discriminatory measures. The point here is that it treats honest and regular tax payers almost equally with people accused of financial frauds. This practice is destroying fiscal norms and legal budgetary framework. The finance bill also lacks clear measures on how to secure its implementation and check misuse of funds.
The finance minister’s attempt to justify the money whitening is understandable – to stop capital flight – while retaining such money for investment at home is more rewarding to set up new industries and generate jobs. But we would like to say that the government by increasing its oversight capacity and curbing corruption of tax officials can plug in the loopholes of unaccounted for money generation instead of announcing pardons every year.
It is common knowledge that this business-friendly government is part of the wealthy people and big business houses and there is a common belief that the fiscal pardon is being extended to benefit such people. The finance minister in his winding-up speech said the budget has given priority to the left-behind sections of the society. But it appears that it lacks enough allocation to provide livelihood to jobless and insolvent people. We would say allocation for the unemployed needs to be raised. Moreover we would ask the government to strengthen hospital capacity to tackle the outbreak of Covid-19 now hitting the nation hard. We are sad to say that we still don’t know how and where from we are going to source corona vaccine. There is no detailed plan for vaccination as yet.
The 35 per cent tax on mobile services is too big because it would cause additional load mainly on the poor. Similarly we are opposed to rapid rise in deficit financing which is 6.2 per cent of GDP this year crossing the 5 per cent threshold. We know such money is spent on big unsolicited projects without accountability and the staggering debt servicing would affect the future generation. We need fiscal prudence and farsight.
