Effect of TOP Tax syst em on buying of shares
5. Comparat ive st udy of Tax revenues. For example India
The comparat ive st udy of Cent re’s t ax revenues under present syst em w it h respect t o 2009-'10 union Budget est imat es and t he proposed TOP Tax syst em. Under t he proposed TOP Tax syst em t he TOP Tax w ill be 4%x3=12% of BE 2009-‘10 GDP 58,56,569crores as each commodit y or service w ill be t ransact ed at an average of t hree t imes(manufact urer/ service provider, dealer and ret ailer) . The revenues from single t ax (TOP Tax of 4%) under TOP Tax syst em, if implement ed, are assumed t o be higher because full GDP w ill be account ed. These below figures are only imaginat ive in nat ure and not based on act ual figures. If TOP Tax syst em is t o be adopt ed and implement ed, the tax collection depart ment s, t ax enforcement agencies, regist rat ion depart ment s for movable and immovable propert ies, census depart ment , public dist ribut ion depart ment , passport offices and revenue depart ment s w ill have t o be merged in banking syst em. The Government ’s non plan expendit ure w ill be great ly reduced.
Alt hough t he Cent ral Government ’s t ax revenues under proposed TOP Tax syst em are a lit t le lesser t han t hat of t ax revenues under t he present t ax syst em, it w ill be more t han compensat ed by t he follow ing fact ors.
There w ill be no unaccount ed GDP and t he revenues f rom TOP Tax on t he act ual GDP, w hich is almost tw ice than the recorded GDP in the present economic system,w ill be act ually t w ice t han t he revenues assumed above. Under proposed TOP Tax syst em t he t ax collect ion expendit ure is almost zero. Similarly t he huge int erest burden on int ernal borrow ings and non plan expendit ure w ill be reduced t o one t hird levels.
This huge amount, saved from interest burden on internal borrow ings and saved non plan expenditure cost on tax collection departments, tax enforcement agencies, registration departments for movable and immovable properties, census department, public distribution department, passport offices and revenue departments, can be invest ed on healt h care services, educat ion sect or, sanit at ion, drinking w at er, housing sect or, irrigat ion sect or, infrast ruct ure sect or, et c., not only t o provide all basic services t o people at free of cost and but also t o generat e huge employment .
Cent ral Excise dut y w hich can be applied only on cars, t obacco product s and soft drinks has not been added t o t he t ax revenues of proposed TOP Tax syst em.
The St at es’ share of revenues from t he proposed TOP Tax w ill be (Rs 1, 63,029 crores) more t han t he t ax revenues under t he present syst em. See Table No: 4 given below .
Under proposed TOP Tax system the overall States tax revenue shares from Union t axes and duties (including TOP Tax share) w ill be more (Rs.92, 618crores) than under present system..
Under t he proposed TOP Tax syst em t here w ill be no t ax evasion, unaccount ed/ shadow t ransact ions, black money and fake currency at all. If w e t ake int o account t he unaccount ed GDP of India, t he act ual GDP w ould have been more t han t he est imat ed GDP under present syst em. So t he proposed TOP Tax revenues accrued from act ual GDP w ill be more (almost double) t han t hat act ually show n in t he t ables. The proposed Profit Tax (PT) has not been added t o t he est imat ed t ax revenues under proposed TOP Tax syst em, as it is not know n t he exact Profit Tax available unt il t he TOP Tax syst em becomes operat ional.
The comparative study of tax revenues of all states under present system w ith respect to 2008-‘09 budget estimates and under the proposed TOP Tax system. Under the proposed TOP Tax system the TOP Tax w ill be 4%3 = 12%of BE 2009-‘10 GDP value of 58,56,569 crores as each commodity or service w ill be transacted at an average of three times (in the manufacturer/ service provider, dealer and retailer chain)
TOP Tax =4%x3=12%of 58, 56, 569crores (GDP) (BE 2009-‘10) 7, 02, 788crores All St at es share=70%of 7, 02, 788crores 4, 91, 951crores
Table No: 4 Rupees in Crores
Under Present Syst em Under Proposed Top
t ax syst em
Year All St at es Tot al All St at es Top t ax
Share
Direct Indirect
2008-‘09(BE)
42,744 2,86,178 3,28,922 4,91,951
Difference bet w een t w o syst ems =1,63,029 crores
The States’ share of revenues from the proposed TOP Tax w ill be (Rs 1, 63,029 crores) more than the tax revenues under the present system.
Comparative study of all states net proceeds of union taxes and duties under present system and proposed “Top tax system
Table No: 5 Rupees in Crores All st at es t ax revenues shares from Union t axes and dut ies for
B.E. 2009-‘10
Under proposed
“ Top t ax syst em”
S.
No
Type of Tax Share
Amount
Share Amount
1. Corporat ion t ax 66,447.61 66,447.61
2. Income t ax 32,376.62
-3. Wealt h t ax 63.65
-4. Cust oms dut y 27,503.11 27,503.11
5. Union excise dut y 18,552.95
-6. Service t ax 19,428.50
-7. Ot her t axes and dut ies -6.70
-8. Expendit ure t ax -3.96
-Total 1,64,361.78 93,950.82
9. All st at e revenues (Direct and Indirect )
2008-’09 B.E. 3,28,922.00
-10. Proposed “ Top t ax syst em” - 4,91,951.00
Grand Total 4,93,283.78 5,85,901.00
Difference bet w een t w o syst ems= Rs.92,618 crores
Under proposed TOP Tax system over all States tax revenue shares from Union taxes and duties (including TOP Tax share) w ill be more (Rs.92, 618crores) than under present system.
6... Advantages of TOP tax system: For example INDIA
There is an est imat ed currency of 10,72,020 crores w it h t he public out of t ot al money supply of 77,25,560 excluding fake currency in t he count ry. (As at 2012 - June 29 ). This physical currency is about 13.8% of t he t ot al money supply in t he economic syst em. Wit h t he adopt ion of t he TOP t ax syst em, all t he available currency not es except Rs.2, Rs.5, Rs.10, and Rs.20 not es w it h t he public w ill have t o be deposit ed in t heir M ain Savings Account / Sub Savings Account s in t he banks. Hencefort h all not es except Rs.2, Rs.5, Rs. 10 and Rs. 20 not es w ill be demonet ised.
TOP Tax syst em rest rict s physical currency t o t he level of just 0.3%of t he t ot al available money in t he banking finance syst em. The remaining 99.7%w ill t ransfer from one account t o anot her account t hrough online t ransfers, debit cards or cheques upon exchange of commodit ies, services, propert ies, donat ions et c. There w ill be no money in t he form of black money and fake currency bot h out side and inside t he TOP Tax syst em. All t he money and w ealt h, generat ed by t he individuals, w ill have t o be const ant ly circulat ed, used, and t ransferred inducing gravit at ion w it hin t his syst em. No money can escape from t he pow erful gravit at ional pull of t he TOP Tax syst em int o t he out er space (ot her count ries) t hrough haw ala, money laundering or ot her illegal w ays. The miniscule part of money in t he physical form (currency not es) w ill act as an Ozone layer t o prot ect t he TOP Tax syst em from harmful U V rays and radiat ion (t errorist and milit ant act ivit ies) from out er space (ot her count ries). The TOP Tax syst em suggest s t ot al removal of int erest rat es on all demand deposit s (savings) and fixed deposit s. The huge availabilit y of money w it h t he banks w ill make it possible t o give loans at t he low est int erest rat es. All t he senior cit izens above t he age of 65 years w it h no or palt ry
incomes, physically challenged, visually challenged, and orphans w ould be given mont hly pensions. To know how t his is possible, please see page number 17 t o 21.
As int erest rat es are very low at 4%per annum t he indust rial product s w ill become cheaper and compet it ive in int ernat ional market s. So t he export s w ill be subst ant ially increased t hereby, decreasing t he w ide gap in t he balance of payment s. As a result t his new syst em may make India an economic super pow er in no t ime.
Under present syst em t he Cent ral Government is paying fert ilizer subsidy direct ly t o t he fert ilizer companies. Now t he proposed TOP Tax syst em suggest s deregulat ion of t he fert iliser prices and t he ent ire allocat ed subsidy for fert ilizers in BE 2009-‘10 budget 49,980 crores can be paid direct ly t o farmers’ M ain Savings Accountas illust rat ed in t he follow ing t able.
Table No: 6 Suggested TOP Tax system marginal farmers are get t ing only small port ion (10 t o 20%) of fert ilizer subsidy. This anomaly shall be effect ively correct ed in TOP t ax syst em.
The M ain Savings Account (M SA) can be operat ed from any bank and anyw here in t his new economic syst em adopt ed count ry. For example in India, It is much easier for t he government t o det ermine below povert y line families t o give t hem mont hly rat ion, old age pensions, pensions for physically challenged, orphans and pensions for visually challenged. The 5crore least income families (20 crore people) based upon M ain savings accounts(M SA) can be given Rupees 1000 per mont h by cash t ransfers direct ly int o t heir main savings account on t he follow ing condit ion
a) They need t o send t heir children t o schools
b) They need t o at t end adult classes at night t o make India 100% lit erat e nat ion.
All orphans’ care and w elfare shall be looked aft er by Cent re and St at e Government s t ill he reaches age of 20 years by providing him/ her free educat ion, healt h care service and high value nut rit ious food. Therefore t here w ill be no child labour in India.
Under t he TOP t ax syst em t here w ill be no benami land holding and a person cannot hold more t han 20 acres of land for agricult ure purpose. Under proposed TOP Tax syst em t he land ceiling w ill be an account basic (M ain Savings Account) unlike family basic under present syst em.
Present ly t he rich are enjoying huge t ract s of agricult ure land under different names in different St at es, making mockery of t he land ceiling act . TOP Tax syst em ensures t hat t he land ceiling act can be implemented in t ot alit y t o perfect ion making Government ’s t ask easier in pushing forw ard land reforms and allocat ing land t o landless poor. If an individual or company acquires land of more t han 20 acres for indust ry, st udios, real est at e or any ot her purpose, land t ax of 10,000 per acre per annum needs t o be levied. If land is acquired for SEZs t he farmers should be paid not only t he market price of t he land but also Rs 1,000 per acre per mont h for rest of his/ her life and t hereaft er t o his/ her legal heir. It is easier for local panchayat s, municipalit ies, corporat ion t o collect house t ax, vacant plot / land t ax and propert ies t ax as all t he det ails of a person’s propert ies are recorded in his/ her M ain Savings Account (M SA).
The regist rat ion charges for purchasing any propert y i.e. land, plot , flat , house or ot her commercial est ablishment s w ill be same and equal all over India irrespect ive of t he place and market value of propert y. The regist rat ion charges w ould be only Rs. 1,000 per acre, Rs. 1,000 per 300 square yards of plot or Rs 1,000 per 1000 square feet of flat and mult iples t hereof.
These regist rat ions can be made in any bank and anyw here in India. It is needless to mention t hat if a person buys a propert y (land, plot , flat , house, commercial est ablishment ) for Rs. 10 lakhs, a TOP t ax of Rs. 40,000 w ill be deduct ed from his M SAor SSAw hile t ransferring t he cash t o t he sellers account . If he/ she buys t he same propert y for Rs. 1 crore t he deduct ed TOP t ax w ill be Rs. 4 lakhs. In t he case a person t ransfers a propert y as a gift t o his/ her son/ daught er or any ot her person, t rust or organisat ion t he TOP t ax deduct ed w ill be nil as t here is no cash t ransfer made.
The most not ew ort hy usage of t he TOP t ax syst em is preparat ion of elect oral rolls for general elect ion, St at e elect ion and local body elect ions. Under t he present syst em t he preparat ion of elect oral rolls is cumbersome and t ime consuming process t aking up t o 6 mont hs and yet t he final list w ill be alw ays defect ive w it h complaint s galore from t he elect orat e w ho do not find t heir names in t he vot ers list on t he poling day. Under t he proposed TOP t ax syst em, M SAlist s in t he banks are virt ually t he elect oral List s and w ill be available t he same day t he elect ion not ificat ion is released. So t here is no quest ion of non-inclusion of any cit izen in t he vot er list and t here w ill be no bogus vot ing.
But in t he case of any by-elect ion, t he vot ers list (M SAlist ) of t he last general elect ion or St at e elect ion, w hich occurred last , needs t o be t aken int o considerat ion because polit ical part ies may encourage t heir follow ers from ot her const it uencies t o change t heir local addresses in t heir M ain Savings Accounts (M SA) w it h new addresses w here t he by-elect ions w ill be held.
By using t his syst em, Government machinery can be fine-t uned t o ensure account abilit y, efficient w eeding out of w ast eful expendit ure and const ant monit oring. All leakages in t he t ransit of funds from government t o end user w ill be plugged t o get t he desired result s. The Cent ral Government must shed it s let hargy, policy vacillat ions and indecision t o provide t he necessary infrast ruct ure for economic development and redist ribut ion of revenues t o t he needy t o alleviat e povert y. The Government w ill have enough money t o bear t he t ot al expendit ure cost of healt h care service and educat ion of all families. Please see page 18 t o 21.
Traders, businessmen, individuals(ow n indust ries) dealers w ill no longer need t o maint ain account books, st ock list s, sales list s, purchase bills et c for assessment purposes.
The exact Populat ion figures of India can be available on any day at any t ime from M ain Savings Accounts and t here w ill be no need for t he Cent ral Government t o carry out laborious process of census at every decade.
If t his TOP t ax syst em is adopt ed by all count ries, t he w hole w orld w ill become int o one homogeneous and reasonably equit able societ y, devoid of all economic ills, t errorism, milit ancy and inequalit y.
There w ill be no fake currency and black money in t he proposed Top t ax syst em, because 1000, 500, 100, 50 rupee not es w ill be demonet ised. Print ing of fake currency in 20 and 10 rupee not es w ill become highly expensive, risky and impossible t o put int o circulat ion in large numbers. M ilit ancy and t errorism is usually fost ered, run and operat ed by t he not orious t riumvirat e of black money, fake currency and ext ort ions. Wit h t he advent of TOP Tax syst em t he t riumvirat e of black money, fake currency and ext ort ions w ill be t ot ally eliminat ed, st emming t he flow of funds t o operat e t errorist modules and causing inst ant deat h t o t errorism and milit ancy.
Polit ical leaders can’t buy vot es by dist ribut ing money, liquor and gift s in t he elect ions and expendit ure limit for each const it uency w ill be st rict ly adhered t o.
As t here w ill be no individual Income t ax, t he individuals w ho run small scale indust ries, business can put t heir all profit s back int o t heir business and slow ly capt ure t he space and market of corporat e companies and M NCs. The corporat e companies and M NCs w ill have t o pay t he Corporat ion Tax (Profit Tax) as per t he exist ing Corporat ion Tax st ruct ure.
There w ill be no duty (Central Excise under proposed TOP Tax system) except on tobacco products, soft drinks and cars.
Reason: Wit h no Excise dut y and VAT/ Sales Tax t he t obacco product s w ill become cheaper result ing in more addict ion and consumpt ion w hich leads t o healt h problems. So a higher rat e of Cent ral Excise dut y should be imposed on t obacco product s t o lessen t heir consumpt ion.
Similarly soft drinks w hich do not have any nut rit ion value should also be levied w it h high rat e of Cent ral Excise duty t o encourage persons prefer fruit juices indirect ly helping farmers, farm labour and fruit vendors. Non t axi service cars also should be imposed w it h high rat e of Cent ral Excise dut y.
Under proposed TOP Tax system no person w ill be allow ed to hold more than 20 acres of land.
Reason: Area of land under cultivation in India is approximately 12.44crore hectares (2006-07 figures) giving agriculture produce 23.07crore tonnes and there are 5.89crore marginal farmers. For every 10 persons just one hectare is available to produce sufficient food grains. Recently huge chunks of agriculture land are being converted in to real estate, S.E.Zs and other purposes, affecting agriculture produce and making marginal farmers into labourers. Usually in India the marginal and small farmers fully utilise their lands. Besides the major crop, they also produce vegetables and pulses as inter crop. The small farmers also raise at least one female buffalo/ cow , goat and sheep for milk not only for his consumption but also for dairies to supplement his earnings. This scenario has changed in rural areas due to advent of real estate boom and S.E.Zs policy. Besides that, w ith the boom of real estate sector, now affluent persons are buying agriculture lands and not doing agriculture seriously.
Large acres of land have been acquired for S.E.Zs and industries beyond actual necessity and
in most cases industries have not been set up or delayed for one reason or other. If this trend continues there w ill be further reduction in area of land under cultivation. This leads to severe shortage of food grains and it is not safe to rely on imports for huge quantity of food grains. Already the prices of agriculture commodities have almost tripled during past five years beyond purchasing capacity of common man. To offset this anomaly a land cess of Rs.10000 per acre per annum needs to be imposed on lands acquired for industry or any other purpose exceeding the limit of 20 acres. A farmer can hold only 20 acres of land for cultivation. This land ceiling w ill be on individual basic, instead of family basic in the present economic system. That means t hat all small scale industries, w hich require less than 20 acres of land, w ill come outside the tax net of land cess.
Under proposed TOP Tax system interest rates need to be removed on fixed deposits and demand deposits.
Reason: According t o 2008-09B.E. combined t ot al liabilit ies of t he Cent re and St at es are Rs.
38, 91,740crore. The Cent re’s int erest payment s alone in t he 2009-10 B.E. w ill be Rs. 225511
38, 91,740crore. The Cent re’s int erest payment s alone in t he 2009-10 B.E. w ill be Rs. 225511